Long-term growth with lower risk. PA Resources Annual Report 2012

Long-term growth with lower risk PA Resources Annual Report 2012

Content Operations The year in brief 1 Statement from the CEO 2 Business model 4 Asset portfolio 5 Strategy and business plan 6 Capital structure and investments 8 Selective exploration 10 Appraisal and development planning 12 Reserves and resources 14 Producing fields 16 Market 18 Sustainability 19 PA Resources share 22 Licence overview 24 Board of Directors Report Regions 25 The Group s business activities 26 Financial summary 28 Risks and risk management 30 Corporate governance report 32 Board of Directors 37 Executive management 38 Five-year summary and definitions of key ratios 39 Financial reports Income statement 40 Statement of comprehensive income 40 Statement of financial position 41 Statement of changes in equity 42 Statement of cash flow 43 Parent company s statements 44 Notes 48 Proposed distribution of earnings 76 Audit report 77 Other information Guide to PA Resources accounting 78 Shareholder information 80 Glossary 81 This is a translation of the Swedish Annual Report. In the event of any differences between this translation and the Swedish original, the Swedish version shall prevail.

Attractive asset portfolio Greenland United Kingdom Greenland Denmark United Kingdom United Kingdom UK 1 Block 22/19a Denmark Denmark G DENMARK 2 Block 9/06 (Gita) 3 Block 12/06 Netherlands NETHERLANDS 4 Block Q7 5 Block Q10a 6 Schagen Netherlands Germany Netherlands Germany GERMANY 7 B20008-73 GREENLAND 8 Licence 2008/17 (Block 8) Tunisia TUNISIA 1 Douleb 2 Semmama 3 Tamesmida 4 Didon 5 Jelma 6 Makthar 7 Zarat 8 Jenein Centre Tunisia Tunisia Republic of Congo (Brazzaville) 1 Azurite 2 Mer Profonde Sud Equatorial Guinea 3 Aseng 4 Alen 5 Block I 6 Block H Equatorial Guinea Equatorial Guinea Equatorial Guinea Republic of Congo Republic of Congo Exploration/Appraisal Development Production Licences where one or more discoveries have been made

PA Resources in 3 minutes PA Resources conducts exploration, devel opment and production of oil and gas assets. The Group has assets in West Africa, North Africa, the North Sea and Greenland. Oil is produced in West and North Africa. The Parent Company is domiciled in Stockholm, Sweden and the Group has a total of 124 employees based at offices in London, Tunis and Stockholm as well as a represen tation office in the Republic of Congo (Brazzaville). Personnel are also stationed at the production facilities in Tunisia. Business concept and business model PA Resources business concept consists of the acquisition, development, extraction and divestment of oil and gas reserves, and exploration for new reserves. Production of oil generates important cash flow that contributes to the investments required to increase the Group s reserves. Geographically, PA Resources focuses on three regions: North Africa, West Africa, and the North Sea. Exploration Reinvestment Appraisal and planning Development Cash flow Production Active management of assets and financing Brief facts A total of 22 oil and gas licences, of which six in production, one under development and 15 in the exploration phase Production of oil in West and North Africa Operator for a total of 11 licences, working interests and partner in other licences 38.1 million barrels of 1P reserves and 55.7 million barrels of 2P reserves Nine potentially commercial discoveries The share (PAR), the convertible bond (PAR KV1) and the SEK bond are all listed on the NASDAQ OMX Stockholm Reserves and resources (Million barrels of oil equivalent) 38.1 1P 55.7 2P 142 Contingent resources 406 Prospective resources PA Resources the investment Cash flow from producing fields Key cash flow with profitable barrels from the Aseng field lays the foundation for the company s growth. Strengthened financial position The capacity to finance future investments and planned amortisations as well as an enhanced position vis-à-vis future transactions. Exploration and appraisal with a possible upside Drilling activities at prioritised assets planned drilling campaign on Block I in Equatorial Guinea in 2013 and a drilling campaign on 12/06 in Denmark during 2013 or 2014. Long-term production growth Development of prioritised assets about 32 million barrels is expected to result in a positive net cash balance in 2018. Reduced working interests for lower risk and investment Reduced working interests in many of the prioritised assets are expected to reduce the size of investment and risk. Equity and net debt before and after the recapitalisation (SEK million) 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Equity 30 Sept 2012 6 Feb 2013, after transactions Net debt

The year in brief The year in brief 2012 in figures Revenue, EBITDA and profit before tax Revenue amounted to SEK 2,184 million (2,154), EBITDA was SEK 1,255 million (1,295) and profit before tax totalled SEK 85 million (158) excluding one-off costs. Cash flow from operations Amounted to SEK 838 million (812) for the full year. One-off costs Non-cash one-off costs were SEK 1,748 million before tax. Of these SEK 1,315 million were attributable to impairment of the Azurite field/mer Profonde Sud in the third quarter, the remainder was attributable to impairment due to relinquished licences and additional investment costs in the Azurite field. Investments During the year, investments totalled SEK 255 million (1,613). Amortisations In total, SEK 568 million of interest-bearing loans and borrowings was amortised and the loan with the Azurite field as collateral was repaid in full. Strengthened balance sheet The recapitalisation was accomplished at the end of 2012 and completed at the beginning of 2013 equity increased by about SEK 1,570 million thereafter. 90% of the convertible bonds were converted to new shares which increased equity by SEK 968 million and decreased the interest-bearing nominal debt by SEK 890 million. A fully underwritten rights issue raised SEK 705 million before issuing costs. Thereafter, equity amounted to about SEK 2,200 million and net debt to about SEK 2,000 million. Earnings and key ratios USD 111 10,000 8,000 6,000 4,000 2,000 per barrel in average sales price 2012 Avarage production per region in 2012 (barrels per day) 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec North Africa West Africa 2012 2011 2010 Average sales price, USD 111 103 76 Average production, barrels per day 7,900 8,600 10,700 Revenue, SEK million 2,184 2,154 2,227 EBITDA, SEK million 1,255 1,295 1,276 Operating profit, SEK million* 684 508 490 Profit before tax for the period, SEK million* 85 158 179 Earnings per share after dilution, SEK -2.36-3.27-0.61 Profit margin, % -76.2-87.1 8.1 Equity per share before dilution, SEK 0.22 4.42 7.54 Equity/assets ratio, % 24.7 31.7 44.1 Debt/equity ratio, % 165.4 141.4 65.2 * Excluding non-cash one-off costs of SEK 1,748 million before tax for 2012 and SEK 2,035 million for 2011. Key events by quarter Temporary closures of three smaller Tunisian onshore oil fields. Provisional announcement of a new licence, Block 22/19a in the UK. Impairment of the Azurite field by SEK 1,315 million. The Board s proposal to strengthen the financial position was published. EGM resolves in favour of the Board s recapitali sation proposal. 2012 Q1 Q2 Q3 Q4 2013 The set-off issue of convertible bonds is accomplished. The rights issue of SEK 705 million is carried out. Two smaller oil fields in Tunisia, Ezzaouia and El Bibane, were divested. The Danish licences 12/06 and Gita were extended for two years and Maja relinquished. Process started for the farm-out of the Zarat licence. Preparations ahead of drilling the sidetrack started at the Azurite field. PA Resources farms out a 10% working interest in German licence. Relinquishment of the Marine XIV licence in the Republic of Congo. Block 17/4b in the UK was relinquished. Preliminary agreement reached for the unitisation of the Zarat field s reserves. PA RESOURCES ANNUAL REPORT 2012 1

OPERATIONS STATEMENT FROM THE CEO Now, a stronger PA Resources 2012 was a turbulent year for PA Resources. The recapitalisation proposal announced by the Board in November 2012 was completed in January 2013, thereby laying the foundation for a new PA Resources a company with strengthened finances, increased room for manoeuvre and with opportunities to progress the company s significant assets and resources. Let me start with a brief review of 2012. Oil prices remained high, production volumes from the Aseng field stabilised at a higher level than originally planned and we reported an increased cash flow, whilst the pace of investment was significantly lower than for the 2008 2011 period. Declining production from Azurite Unfortunately, production volumes from the Azurite field in the Republic of Congo were significantly lower than planned. There are several underlying reasons behind this reduction, primarily overestimates of the reserve s size prior to development. When it became apparent that the total investment in the field could not possibly be repaid, the entire remaining value of the field was impaired in the third quarter of 2012. As a partner in the Azurite field, PA Resources is currently awaiting the outcome of the operator s evaluation of possible future activities at the field. Strengthened cash flow and lower investment Although production levels gradually declined in 2012, primarily due to lower production from the Azurite field, cash flow from operations increased. Particular benefit stems from the profitable barrels from Aseng, where the field s investments have already been recovered in cash, and from a continued high oil price. Investments for the full-year 2012 totalled SEK 255 million, which was at the lower end of the full-year forecast of SEK 240 375 million. Declining production from Azurite had a negative impact on the company. The combination of a lower return together with the amortisation of loans linked to the asset significantly weakened the company s financial position and flexibility. Therefore, in November 2012, the management and Board proposed a package of measures aimed at reducing debt and raising liquidity. Particular benefit stems from the profitable barrels from Aseng, where the field s investments have already been recovered in cash, and from a continued high oil price. Recapitalisation accomplished The recapitalisation plans were successfully implemented. Slightly more than 90 percent of the convertible bonds were converted to new shares in December 2012, which resulted in an increase of SEK 968 million in equity. In early February 2013, the subsequent underwritten rights issue was completed which raised SEK 705 million for the company before issuing costs. After completion of both transactions, equity amounted to about SEK 2,200 million and net debt to about SEK 2,000 million. Plans for 2013 The strengthened balance sheet significantly enhances the company s scope for manoeuvre. It improves PA Resources negotiating position vis-à-vis future transactions as well as the starting point for continued financial activities and amortisation in 2013. For the full-year 2013, the expected investment level is estimated to be SEK 250 380 million assuming unchanged working interests in prioritised assets. If PA Resources decreases its working interests, this means a lower level of investment since the investment will be shared with the partner that chooses to farm in to the asset. At present, the investment forecast comprises ongoing operational expenditures in producing fields, the drilling campaign in Block I in Equatorial Guinea and a possible drilling campaign on 12/06 in Denmark, dependent on rig availability. A prerequisite for activities and development pertaining to other prioritised assets is the reduction in working interest through farm-outs so that investments are proportionate to the company s size and financial capacity, in line with the company s strategy of reducing the size of investments and thereby the risk profile of the company. and onwards to 2018 PA Resources has a significant asset portfolio with producing fields, fields under development and assets where development has yet to start. In addition, there are assets with good exploration potential. The strategy for realising these values over the next five years that is leading up to 2018 is summarised in the following business plan, which is described in more detail on pages 6-9: 2 PA RESOURCES ANNUAL REPORT 2012

OPERATIONS STATEMENT FROM THE CEO All things considered, PA Resources now has a platform for future value creation. Cash flow from producing assets will finance continued operational expenditures in the Aseng and Didon fields while a strengthened balance sheet and new financing solutions enable amortisation of bond loans and credit facilities. The farm-out of prioritised assets will be carried out to reduce exposure to individual projects and strengthen the financial position ahead of future transactions. A number of negotiations and discussions are already ongoing. The development of 32 million barrels oil equivalent to production financed by cash flow from producing assets in combination with new financing, which leads to planned production growth from 2016 to 2018. The plan is to advance Broder Tuck in Denmark and Zarat in Tunisia into development whilst progressing the appraisal of Lille John in Denmark, Elyssa in Tunisia and Diega in Equatorial Guinea towards development. In addition, the company will continue to conduct active and selective exploration activities to further expand the company s discovered resource base. The objective of the business plan is that a gradual planned growth in production will reduce the debt burden. It will also result in a positive net cash balance for PA Resources in 2018, which will significantly enhance the company s fundamentals. All things considered, PA Resources now has a platform for future value creation. Equipped with important cash flow, primarily from the Aseng field, and a better dimensioned capital structure, the company can refinance loans and continue to invest in future production growth. Through active efforts to decrease working interests in some of the company s prioritised assets the risks of individual projects can be balanced to unlock the value in the company s assets, reserves and resources over the next several years. Stockholm, March 2013 Bo Askvik, President and CEO PA RESOURCES ANNUAL REPORT 2012 3

OPERATIONS BUSINESS MODEL AND ASSETS Business model the foundation of long-term growth Successful exploration increases recoverable oil and gas resources while appraisal activities determine whether the discovery is profitable enough to develop to production. Cash flow from producing fields is reinvested in exploration, appraisal and development activities. The business model cash flow in combination with balanced external financing lays the foundation for long-term profitable production growth. The objective is to reveal the values that the various phases of the business model create through asset transactions. Exploration Structures and prospects are identified through analysis of geological and technical conditions as well as diligent preparation and later tested through drilling. Successful exploration results in new discoveries of oil and gas. Appraisal and planning Continued analysis and appraisal activities are required to quantify the size of a discovery in terms of contingent and therefore potentially recoverable resources. Additional appraisal wells are often required. Thereafter an assessment is formed of whether the discovery is commercially viable for development which can increase the fair value of the asset. Development Resources are normally counted as reserves when a development is planned or approved. Risk declines the closer a field comes to its production start, which also increases its value. Production When a field is brought into production, the sale of oil or gas generates a cash flow which is reinvested in contin ued exploration, appraisal and development activities. Reinvestment Cash flow Exploration Appraisal and planning Development Production Active management of assets and financing Active management of assets and financing PA Resources works in parallel with the active management and refinement of the assets value. The objective is to utilise various forms of transactions to reveal the assets value while reducing risk and size of investments. Efforts are continuously ongoing with financing activities for planned and ongoing projects, which, in combination with cash flow, enables investments in future production growth. 4 PA RESOURCES ANNUAL REPORT 2012

OPERATIONS BUSINESS MODEL AND ASSETS Attractive asset portfolio PA Resources assets include producing fields, fields under development and assets where development has yet to commence. In addition, there are other assets with major exploration potential. A key precondition for profitable growth is the cash flow generated by existing production. PA Resources asset portfolio comprises a total of 22 oil and gas licences. Of six producing fields: four are located in Tunisia and one each in the Republic of Congo (Brazzaville) and Equatorial Guinea. One field is under development, which is the Alen field offshore Equatorial Guinea. Further exploration potential The appraisal of structures and development planning is ongoing for assets, where five discoveries have been confirmed, in Tunisia, Denmark and Equatorial Guinea. In addition to these projects, exploration potential exists in 15 licences in Denmark, Germany, the UK, the Netherlands, Greenland, Tunisia, the Republic of Congo (Brazzaville) and Equatorial Guinea. Previous discoveries have been made on several licences and an exhaustive list of PA Resources assets, operatorships and partners is detailed in the licence overview on page 24. Licence changes and transactions in 2012 The small producing fields Ezzaouia and El Bibane in Tunisia were sold to Candax Energy Inc in January. The Danish licence 9/95 Maja was relinquished since drilling on the licence was assessed as conflicting with the company s strategy. PA Resources was provisionally awarded a 50% working interest in Block 22/19a the 27th UK licensing round. Marine XIV in the Republic of Congo was relinquished following evaluation of potential. Block 17/4b in the UK was relinquished after detailed analysis. 10% of the German licence B20008-73 was farmed out to Danoil Exploration A/S. Overview of PA Resources assets West Africa North Africa North Sea/Greenland Production Congo: Azurite Equatorial Guinea: Aseng Tunisia: Didon, Douleb, Semmama, Tamesmida Development Equatorial Guinea: Alen Appraisal and planning Equatorial Guinea: Diega Equatorial Guinea: Carla Tunisia: Zarat Tunisia: Elyssa Denmark: 12/06 Broder Tuck Netherlands: Q7 & Q10a Denmark: 12/06 Lille John Exploration Equatorial Guinea: Block I Congo: MPS Equatorial Guinea: Block H Tunisia: Makthar Tunisia: Jenein Centre Tunisia: Didon South and North Tunisia: Jelma Denmark: 9/06 Gita UK: Block 22/19a and 22/18c Denmark: 12/06 Netherlands: Schagen Germany: B20008-73 Greenland: Block 8 Oil Gas/condensate Prioritised assets The relative size of the circles illustrates an approximation of expected volumes of oil and/or gas, adjusted for risk in each respective phase. Investments and ongoing activities are concentrated to the prioritised development projects and to the producing fields. Remaining exploration potential exists in various structures for assets that are not currently prioritised. Discoveries have been made previously on several of the assets. PA RESOURCES ANNUAL REPORT 2012 5

OPERATIONS STRATEGY AND BUSINESS PLAN Continued development with lower investment and risk PA Resources financial position was significantly strengthened through the two transactions completed at the end of 2012 and in early 2013. The level of debt declined, equity increased and new liquid funds were added. The above, in combination with cash flow from producing fields create favourable conditions for the continued development of the company s prioritised assets. This section describes the goals, strategy and plan that form the basis for PA Resources continued operations from 2013 2018. Strategic focus To reduce significant working interests, in one or more stages, in several prioritised assets to reduce the level of risk and the size of the investment In the first phase, PA Resources will continue as operator for these licences and can thereby adjust the pace of investment To focus on cost-efficient development using adjacent infrastructure Strategy and business plan Cash flow from operations and strengthened liquidity enables maintenance, financing and amortisation Reduced working interests lower the level of investment and risk Development of prioritised assets for long-term production growth Cash flow from operations (SEK million) 900 800 700 600 500 400 300 200 100 0 2010 2009 2010 2011 2012 Projected development of investments 2013 2018 (SEK million) 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 2011 2012 2013E 2014E 2015E 2016E 2017E 2018E Planned developement of reserves for production (millon barrels) 40 35 30 25 20 15 10 5 0 2013 2014 2015 2016 2017 2018 Producing fields Fields to be developed Selective exploration to increase the resource base 6 PA RESOURCES ANNUAL REPORT 2012

OPERATIONS STRATEGY AND BUSINESS PLAN objective is to fully amortise the company s liabilities through developing about 32 million The barrels to production by 2018 Focus 2013 The cash flow from producing fields finances the investments required at the Aseng and Didon fields. The strengthened balance sheet together with new loan financing enables future amortisation of bonds and loans. Ongoing investments and additional production wells at the Aseng and Didon fields. Financing activities to enable planned amortisation of bonds outstanding and operating loans. Continue active processes to reduce working interests in certain prioritised assets: - The Zarat licence in Tunisia (which includes Elyssa, the Zarat field and Didon) - 12/06 in Denmark (which includes the Broder Tuck and Lille John discoveries) Reduced risk exposure in individual projects and adjustment of the size of investment. The strengthened balance sheet enhances the position vis-à-vis farm-outs and transactions. Continued processes with various interested parties and business partners aimed at gradually reducing working interests. The cash flow in combination with new financing enables the continued development of prioritised assets in total, the plan is to develop about 32 million barrels to production from 2016-2018. The plan is to advance Broder Tuck in Denmark and Zarat in Tunisia into development whilst progressing the appraisal of Lille John in Denmark, Elyssa in Tunisia and Diega in Equatorial Guinea towards development. Maintain the net debt level near the post-transaction level (about SEK 2 billion) for the duration of the investment phase. Positive net cash balance from 2018. Appraisal and planning activities on 12/06, establishment of development alternatives, as well as secure rigs for the drilling campaign that includes the appraisal of Lille John and potential exploration. Final allocation of reserves for the Zarat field in Tunisia and an established development plan. Continued analysis and planning ahead of the appraisal well on Elyssa. Updated investment estimates based on progress. Continue selective exploration and appraisal activities with a possible upside, primarily in Equatorial Guinea and Tunisia. Additional potential and resources exist in the portfolio but are not included in the current business plan (see illustration of asset portfolio on the preceding pages). Continued appraisal and/or exploration of Block I in Equatorial Guinea. Drilling campaign on 12/06 in Denmark during 2013 or 2014 when a rig becomes available. New seismic surveys that cover identified leads and prospects on the Makthar licence in Tunisia. PA RESOURCES ANNUAL REPORT 2012 7

OPERATIONS CAPITAL STRUCTURE AND INVESTMENTS Strengthened financial position for continued development investments Exploration and development of oil and gas properties are capital-intensive, high-risk activities. In 2011 and 2012, the Azurite field generated significantly lower returns than planned which placed the company in a critical financial position at the end of the year. The strengthening of the balance sheet in early 2013 creates the preconditions necessary for continued investments which also presuppose a lower working interest since the objective moving forward is to reduce risk exposure and the size of investments. To a greater degree, future investments will be dimensioned according to the company s cash flow and debt. Development during the year Activities on Azurite FDPSO The principal underlying reason behind PA Resources weakened financial position in 2012 was a significantly lower than expected result from the Azurite field in the Republic of Congo. During the year, the company s share of production at Azurite was almost 10,000 barrels per day lower than the plan presented in 2010. On two occasions, in 2010 and 2011, the field s reserves were revised downwards. The review of asset values for 2012 resulted in an additional impairment of SEK 1.3 billion in the third quarter. In total, cash flow from the Azurite field in 2010-2012 was over SEK 2.9 billion lower than originally planned. In all likelihood, the total investment in the field will not be recouped. The conditions applicable to PA Resources loans linked to the asset successively deteriorated, which led to accelerated amortisation in 2012. During the year, total net amortisation of interest-bearing liabilities was SEK 568 million. The USD 250 million loan that was part of the strengthened capital structure in 2010 was repaid in full in June 2012. The impairment charge in the third quarter placed the company in breach of two bond loan s covenants. In combination with the repayment of the credit facility, this meant that PA Resources was forced to take measures to increase equity and radically reduce interestbearing loans and borrowings in relation to assets. Two transactions a strengthened balance sheet In early November 2012, the Board of PA Resources submitted the following proposal: A new issue of B-shares to holders of PA Resources convertible bond 2008/2014 which was completed in December. Approximately 90% of the total nominal amount including accrued interest was thereby converted to B-shares. Equity increased by SEK 968 million and net debt declined by a nominal SEK 890 million. A fully underwritten rights issue of about SEK 705 million was completed in January 2013 and directed to all shareholders, including holders of convertible bonds who had accepted the set-off offer for convertibles. Following completion of these transactions, equity increased by a total of about SEK 1,570 million and thereafter amounted to SEK 2,200 million and net debt was about SEK 2,000 million. Development of equity and net debt before and after transactions (SEK million) 4,000 3,000 2,000 1,000 0 Equity 30 sept 2012 31 Dec 2012 after set-off issue Net debt 6 Feb 2013 after rights issue 8 PA RESOURCES ANNUAL REPORT 2012

OPERATIONS CAPITAL STRUCTURE AND INVESTMENTS investment plan entails a significantly lower cost after development per barrel The Planned investments in 2013-2018 PA Resources objective is to develop a total of 32 million barrels of reserves to production leading up to 2018, to carry out the necessary investments in maintenance at producing fields and to continue selective exploration efforts. The total investment requirement is estimated at about SEK 1,800 million for the 2013 2018 period. The development cost is estimated at about USD 9 per barrel conditional on the planned farm out process introducing new partner(s) to reduce the net investment. Accordingly, the investment plan will result in a significantly lower development cost per barrel than in preceding years. The business plan presented in conjunction with the transaction completed in December 2012 and early January 2013 forms the basis for the investment process. Accordingly, the investment plan is impacted by changed conditions for the various assets and, in parallel, presupposes that the assumptions on which the plan is based are fulfilled. Therefore, it is important to emphasise that the plan should be regarded as a description of the status at the end of 2012, which means it is subject to continuous revision. Investment forecast 2013-2018 before and after farm-out transactions (SEK million) 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 2011 2012 2013E 2014E 2015E PA Resources share of investments Partners share of investments Planned results reduction in net debt and increased cash flow The objective under the development phase is to maintain the level of net debt of around SEK 2,000 million reached following the transactions in early 2013. Net debt during the period 2013-2018 presupposes successful investments in development, which form the basis for assumptions regarding cash flow from production. At the end of 2018, PA Resources is expected to have fully amortised debts and thus have net cash of about SEK 600 million. 5.0 4.0 3.0 2.0 1.0 0-1.0 2016E Estimated development of net debt and average production Billion SEK 2011 2012 2013E 2014E 2015E 2016E 2017E 2018E Net debt actual Production Net debt estimate 2017E 2018E 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 barrels per day The investment plan prerequisites Reduction of significant working interests, in one or more stages, to reduce the level of risk through nominally lower investment. No development projects started prior to performing farm-outs. In the first phase, PA Resources will continue as operator and can thereby adjust the pace of investment. Gradual farm out of 100 to 20% of Zarat and Elyssa in the Zarat licence Farm out of 100 to 50% of the Didon field, which is also part of the Zarat licence Gradual farm out of 64 to 15% of 12/06 in Denmark, including Lille John and Broder Tuck. PA Resources future working interest Planned farm out Other existing owners Partners assume portions of PA Resources investment costs through a so-called carry. The plan is based on an oil price of USD 110 per barrel and a USD/SEK exchange rate of 6.53. Focus for 2013 Cash flow together with the refinancing of loans maturing in 2013 will finance planned investments and amortisations Updating investment estimates based on developments, farm-outs and/or agreements pertaining to various licence partnerships Performing farm-outs and other asset transactions to reduce investments and possibly add liquidity. PA RESOURCES ANNUAL REPORT 2012 9

OPERATIONS SELECTIVE EXPLORATION Continued focused exploration The exploration activities of PA Resources lay the foundation for organic resource base growth. Exploration activities are based on sound technical expertise and experience within a framework of target areas. In 2012, the work primarily focused on the analysis and evaluation of data on licences in Denmark, the UK and Tunisia. Exploration areas UNITED KINGDOM 1 Block 22/19a O DENMARK 2 Block 9/06 (Gita) P 3 Block 12/06 O 8 1 2 3 7 6 5 4 Activities in 2012 Tunisia: Evaluation and seismic analysis of Jelma and Makthar The Jelma and Makthar licences are adjacent to the small producing fields of Douleb, Semmama and Tamesmida onshore in Tunisia. The two licences comprise substantial areas of 7,216 km 2 and 3,828 km 2 respectively and are relatively unexplored. The licences are assessed as containing structures similar to those found in the producing fields in the area. In 2011, two shallow exploration wells were drilled in the Jelma licence and whilst encouraging, did not make commercial discoveries of hydrocarbons. Efforts to evaluate the potential of the licences continued in 2012 based on the results of these wells. The Jelma licence was extended to 2016 in the fourth quarter of 2012. On the Makthar licence, work focused on detailed analysis of available 2D seismic data to define a future prospect inventory for further activity. The Makthar licence was extended to 2014 in the fourth quarter. The UK: New licence and relinquishment of two licences In 2012, seismic analysis work was completed for two UK licences. This resulted in the relinquishment of licence P1342 (Block 17/4b) in December 2012 and licence P1802 (Block 22/18c) in January 2013. In October, PA Resources was provisionally awarded licence 22/19a in the 27th UK licensing round. The licence comprises the, as yet undeveloped, Fiddich gas/condensate field which was discovered in 1984. PA Resources will be operator of the licence with a working interest of 50%. Denmark: Relinquishment of licence 9/95 Maja In the second quarter, PA Resources elected to withdraw from its involvement in Licence 9/95 given the undertaking under the licence to drill a deep high-pressure, high-temperature (HPHT) well. The prospect to be drilled was high cost and high risk and as such not consistent with PA Resources strategic focus in the North Sea. The withdrawal resulted in an impairment of SEK 89 million which was recognised in the second quarter. Denmark: Extension of 9/06 Gita In May, the Danish licence 9/06 Gita was extended for two years. Supplementary studies will be completed to evaluate the prospectivity for the Upper Jurassic as well as for the shallower levels in the Cretaceous and Tertiary periods respectively. Greenland: Block 8 licence extended At the end of 2011, analysis was completed of a 2D seismic survey undertaken by PA Resources in 2010 of Block 8 offshore West Greenland. A number of extremely large potential leads were identi fied with a high level of risk. Any further significant investment, including dril- NETHERLANDS 4 Block Q7 P 5 Block Q10a P 6 Schagen P GERMANY 7 B20008-73 O GREENLAND 8 Licens 2008/17 (Block 8) O TUNISIA 9 Jelma O 10 Makthar O 11 Zarat O 12 Jenein Centre P RepubliC OF Congo (Brazzaville) 13 Mer Profonde Sud P O= PA Resources operator P= PA Resources partner = One or several discoveries made Drilling programme 2013/2014 PA Resources has a few firm drilling commitments in the coming two years. Some of these are dependent on the availability of rigs or the farm-out of working interests to a partner. Country/licence Field/ Prospect Time Type of well/number Tunisia: Zarat Elyssa* 2013/2014 Appraisal/1 Tunisia: Makthar 2014 Exploration/1 Equatorial Guinea: Block H Aleta 2013 Exploration/1 Equatorial Guinea: Block I 2013 Appraisal/exploration/1-2 ** Denmark: 12/06 Lille John 2013/2014 Appraisal/1-2 ** Will Scarlet 2013/2014 Exploration/1 ** Netherlands: Q7/10a Q7-FA Q4 2013 Appraisal/1 * The well is contingent upon a farm-out of the Zarat licence. ** Possible well. The drilling programme is revised continuously based on the capex budget and prioritised commitments. 10 9 13 12 14 15 EQUatorial guinea 14 Block I P 15 Block H P ling, requires PA Resources to find one or more new partners. During the year, PA Resources applied for an extension of the licence which was granted in the third quarter. Equatorial Guinea: Renewed exploration on Block I A drilling campaign will be undertaken in the first and second quarter of 2013 with the Atwood Hunter rig. It is planned to commence an exploration well in the first quarter on the Carla South prospect on a trend proven by the 2011 Block O Carla discovery. Meanwhile, evaluation continues on further exploration prospects in Block I. See the map on page 15 for reference. 11 10 PA RESOURCES ANNUAL REPORT 2012

OPERATIONS SELECTIVE EXPLORATION Further exploration potential on 12/06 in Denmark The 2011 drilling campaign by PA Resources in southern Denmark resulted in two discoveries, both at levels previously overlooked. The Jurassic sandstone encountered in Broder Tuck 2 was an excellent reservoir with a good gas and condensate column. The discovery of light oil at an almost unprecedentedly shallow depth in Lille John was also a significant discovery. The two discoveries are very different. Broder Tuck is a Jurassic gas and condensate reservoir where PA Resources efforts are focused on evaluating whether it can be developed without further appraisal drilling. Conversely, the Miocene oil discovery in Lille John is a relatively unexplored and poorly understood reservoir in Denmark and will need further appraisal drilling. The results of the wells are viewed as positive for the adjacent German B20008-73 licence where PA Resources recently farmed out 10% to Danoil Exploration A/S which is also a partner in licence 12/06. On the German licence, mapping is ongoing of existing 3D data. Licence 12/06 was extended until May 2014 with the possibility for further extension. Appraisal and devevelopment work programme 2012/2013 Broder Tuck In 2012, work focused on detailed analysis of the data gathered in 2011. The goal is to assess the size and commercial potential of the discovery. Discussions with the owners of nearby infrastructure and export pipelines have also commenced to determine the basis for the possible provision of services to Broder Tuck. Ultimately these activities are aimed at a decision on commercial development and whether or not further appraisal drilling is first required. Lille John Reprocessing of the 3D data is ongoing for two purposes: firstly to assist in determining the optimum appraisal location for the Miocene discovery and secondly to facilitate mapping of the remaining deeper prospectivity. Availability of jack-up drilling rigs qualified to work offshore Denmark is extremely limited but a search has been ongoing to find and contract a suitable rig in 2013 or 2014 to allow appraisal drilling to take place. Brief facts 12/06 Located in the Danish part of North Sea, adjacent to existing oil and gas infrastructure Gas/condensate discovery at Broder Tuck in 2011 in the Middle Jurassic layer about 25-50 million barrels of oil equivalent of contingent resources including liquids. Water depth is around 40m. Lille John oil discovery in 2011 light oil in Miocene sandstone at about 900m depth below the seabed. Water depth is around 40m. PA Resources is operator with 64% Other partners: Nordsøfonden (20%), Danoil Exploration A/S (8%) and Spyker Energy APS (8%) Adjacent to German licence B20008-73 (PA Resources operator with 90%) Drilling on Broder Tuck one of two Danish discoveries in 2011. Focus for 2013 Evaluation of further exploration potential on 12/06 in Denmark and adjacent Licence B20008-73 in Germany Exploration on the Carla trend in Equatorial Guinea Block I New seismic survey of the most promising prospects in Makthar in Tunisia Continued analysis of the potential of the Jelma licence in Tunisia PA RESOURCES ANNUAL REPORT 2012 11

OPERATIONS APPRAISAL AND DEVELOPMENT PLANNING Appraisal and development planning of discoveries In most cases, continued appraisal drilling is required to establish the size of the discovery after the successful conclusion of exploration drilling. In parallel, various development alternatives are evaluated for the purpose of assessing the commercial prospects for the discovery and the need for additional appraisal drilling. During the year, PA Resources operations focused mainly on appraisal and development planning for previous discoveries in Denmark, Tunisia and Equatorial Guinea. The objective is to gain approval of development plans which are the basis of future investments. The appraisal areas DENMARK 1 Block 12/06 O TUNISIA 2 Zarat + Elyssa O RepubliC OF Congo (Brazzaville) 3 Mer Profonde Sud P EQUatorial guinea 4 Block I P 4 2 1 Activities in 2012 Denmark: Appraisal and planning activities on 12/06 Following the successful conclusion of drilling on the Danish licence 12/06 in 2011, efforts in 2012 focused on the continued analysis of data and tests. Technical and commercial studies were performed for the gas and condensate discovery at Broder Tuck and the oil discovery at Lille John. The work comprised the planning of a future appraisal well for Lille John, which is located in shallow water. The O= PA Resources operator P= PA Resources partner = One or several discoveries made plan is for drilling to also include additional exploration prospects that have been identified. The licence was extended by two years in May until 2014. Read more about 12/06 on page 11. 3 Construction work on the Alen platform. 12 PA RESOURCES ANNUAL REPORT 2012

OPERATIONS APPRAISAL AND DEVELOPMENT PLANNING Zarat and Elyssa two of the largest discoveries for development in Tunisia The Zarat field and Elyssa are both part of the Zarat licence, offshore Tunisia, which includes the producing field at Didon. The two discoveries are two of the largest and, as yet, undeveloped discoveries made in Tunisia and comprise two of PA Resources prioritised assets. The recoverable volumes from the two fields are estimated at 54 million barrels of oil and 69 million barrels of oil equivalent for PA Resources. Tunisia has an increasing shortfall of domestic gas and, accordingly requires new development projects for gas. Several additional structures have also been identified on the Zarat licence, which are identical for Zarat, Elyssa and Didon. The potential of the licence was evaluated based on a recently updated seismic model and it has been extended until July 2015. Early in the third quarter, PA Resources initiated a formal process to reduce its working interest in the licence, this is a key prerequisite for carrying out the development and appraisal projects. Zarat Whilst the Zarat Field was discovered in 1992, development has not progressed pending appraisal drilling in the block to the north, jointly administered by the authorities of Libya and Tunisia. Following an appraisal well which was drilled in the northern block in 2010, discussions have been ongoing to plan a development in parallel with establishing the split of reserves between the two licences through a unitisation. In December 2012, a preliminary agreement was reached regarding the principles for unitisation of the Zarat field with Sonde Resources, which holds the Joint Oil Block north of the Zarat licence. A joint plan of development is being prepared for submission to the Tunisian regulatory authority for approval at the end of the second quarter of 2013. Various different production schemes have been considered including re-injection of gas allowing the production of oil and condensate for a period before gas sales commences. Elyssa The field was discovered in the mid-1970s and a total of four wells have been drilled including a sidetrack. The latest well was drilled in 2006. Analysis of 3D seismic data over Elyssa and the entire Zarat licence was concluded during the fourth quarter. It is planned is to drill an additional appraisal well on the Elyssa field in 2013 or 2014, as part of the licence commitments. Brief facts about Zarat and Elyssa Located in the Gulf of Gabes: Zarat 80 km and Elyssa 50 km offshore Tunisia Water depth: Zarat about 90 metres, Elyssa about 50 metres Existing infrastructure in the proximity The Zarat field was discovered in 1992 and appraised in 1995 and 2010 The Elyssa field was discovered in 1975 and requires further appraisal drilling PA Resources is operator with a 100% working interest in the Zarat permit, the Tunisian government, ETAP, can elect to take a working interest of up to 55%. PA Resources holds no interest in the Joint Oil block to the north. The Netherlands: Appraisal of licences Q7 and Q10a During the year, the evaluation of the technical and financial feasibility was completed of the existing gas discovery on Blocks Q7 and Q10a. Block Q/7 covers an area of approximately 400 km 2 and includes the earlier Q7-FA gas discovery from the 1960s. In the fourth quarter, the licence group decided to drill an appraisal well on the Q7-FA discovery, with the intention of later utilising the well as a production well if successful. Drilling will be undertaken when a rig becomes available, at the earliest in the fourth quarter of 2013. Equatorial Guinea: Appraisal activity on Block I Work has been ongoing to progress the un-developed Diega field in Block I which extends into Block O to the north towards development. Following the planned Carla exploration well it is possible that an appraisal well on the Diega field will be drilled. See the map on page 15 for reference. Focus for 2013 Continued development planning and discussions pertaining to use of infrastructure as well as the contracting of a rig for appraisal drilling at the Lille John discovery on 12/06 in Denmark Progress the drilling of an appraisal well on the Elyssa discovery in Tunisia Finalisation of the unitisation and submission of a joint development plan for the Zarat field in Tunisia Progress the drilling of an appraisal well on the Diega field in Equatorial Guinea PA RESOURCES ANNUAL REPORT 2012 13

OPERATIONS RESERVES AND RESOURCES Reserves and resources PA Resources reserves and resources comprise the volumes of oil, gas and other hydrocarbons that are assessed as being located in the subsurface of the Group s fields and licences. In 2012, the ratio of proven (1P) reserves to proven and probable (2P) reserves increased. Reserves declined during the year due to production and downward adjustment of reserves at the Azurite field but were offset, to a certain extent, by increased reserves in the producing fields in Tunisia and Equatorial Guinea. Facts about the reserves PA Resources reserves are 100% oil or condensate and are contained in five Tunisian fields (Didon, Douleb, Semmama, Tamesmida, and Zarat), the Azurite field in the Republic of Congo and the Aseng and Alen fields in Equatorial Guinea. At year-end, the proven and probable (2P) oil and gas reserves totalled 55.7 (60.2) million barrels of oil equivalents on a working interest basis. Of these, 38.1 (39.1) million barrels were 1P reserves. This corresponds to 25.1 million barrels of 1P reserves and 36.9 million barrels of 2P reserves computed on a net entitlement basis. Net entitlement barrels are, expressed simply, those barrels that PA Resources receives after tax and which reflect the terms of the production sharing agreements in West Africa and the effects of taxes and royalties in Tunisia. Changes in reserves and resources in 2012 The ratio of proven (1P) reserves to proven and probable (2P) reserves increased from 65% to 68%. Annual production reduced reserves by 2.9 million barrels. After adjustment for the year s production, 2P reserves were revised downwards by 1.6 million barrels. The decrease was primarily due to a downward adjustment of reserves on the Azurite field (-2.9 million barrels) offset by the upward adjustment of reserves in the producing Tunisian fields by slightly more than 1 million barrels. 1P reserves increased by 1.9 million barrels primarily due to an upgrade of reserves on the Aseng field of 18 million barrels (1.03 million barrels for PA Resources), which largely offset the year s production. In 2012, the Aseng field produced a total of 22.6 million barrels of which PA Resources share was 1.29 million barrels. Contingent resources amounted to 142 million barrels (145) and risked prospective resources amounted to 406 million barrels (409), which was, broadly, unchanged year-on-year. Development of reserves and resources (million boe) Development of reserves in 2012 Working Interest Total Net Entitlement Total (Million barrels of oil equivalent) 1P/P90 2P/P50 1P/P90 2P/P50 Reserves as per 31/12/2011 39.1 60.2 25.9 40.4 Production -2.9-2.9-2.1-2.1 Revisions +1.9-1.6 +1.3-1.4 Reserves as per 31/12/2012 38.1 55.7 25.1 36.9 The difference between reserves and resources Proven (1P) reserves: Extraction assessed as having a probability in excess of 90% in the current economic climate. Proven and Probable (2P) reserves 2P: Proven and Probable reserves with a probability in excess of 50% of extraction in the current economic climate. Contingent resources: Estimated recoverable volumes from known discoveries that have been confirmed through drilling but which do not yet fulfil the requirements for reserves. Risked prospective resources: Prospective accumulations of hydrocarbons which have yet to be proven through drilling. Includes resources classified under Leads. Consideration is taken in respect of the likelihood of making discoveries. Calculation and revision of reserves and resources All reserves were calculated using the published McDaniel and Associates Brent oil price forecast effective 1st January 2013, with an average price of USD 105 per barrel for the period 2013-2021. Brent price is adjusted to reflect appropriate differentials between the Brent marker and the relevant field s crude oil sales. PA Resources reserves are classified according to the 2007 guidelines and classifications in the Petroleum Resources Management System (SPE-PRMS 2007). Significant reserves are examined by a qualified third party. With regard to those fields where PA Resources has a low proportion of reserves, the assessment is based on internal or the operators own assessments. 450 400 350 300 250 200 150 100 50 0 1P reserves 2012 2011 2P reserves Contingent resources Risked prospective resources 14 PA RESOURCES ANNUAL REPORT 2012

OPERATIONS ONGOING DEVELOPMENT PROJECTS Ongoing development projects When a commercial discovery is assessed as commercially viable, the development phase is initiated. An approved development plan means that those resources estimated as being recoverable are then classified as reserves thus increasing the value of the asset. During the development phase, significant investments are made for which cash flows from existing fields comprise a key base. In 2012, the Alen field in Block I was the only development project ongoing. The project has an anticipated production start in the third quarter of 2013. Activities in 2012 Equatorial Guinea: The Alen field adds supplementary infrastructure The Alen field in the Gulf of Guinea offshore Equatorial Guinea is the second field to be developed of the four that were discovered by the successful drilling campaign in 2007 2008. The development plan for the Alen field received regulatory approval in January 2011. PA Resources working interest in Alen is only 0.29% since only a minor portion of the field s gas condensate reserves extend into Block I whilst the majority lies in the adjacent Block O. While the contribution to PA Resources net production provided by the Alen project is modest, its contribution significantly lowers PA Resources cost per barrel produced, since the Alen field utilises the Aseng field for condensate storage. The Alen field could in future also provide adjacent fields with gas-related infrastructure if and when gas sales commence from Alen. In 2012, the pace of development continued at a high level. At the start of the year, work was completed on the subsea wells with the Atwood Hunter drilling rig. Thereafter, the platform wells were drilled with the Atwood Aurora jack-up rig and the installation of the wellhead jacket was completed. Onshore construction activities were almost complete at year-end, since all major modules were either fully or partially completed and preparations for shipping to Equatorial Guinea were underway. Modules for the Alen platform were manufactured on land. In 2013, the remainder of the onshore construction work will be completed and thereafter, all of the components shipped by barge to Equatorial Guinea to be installed. The next phase is installation and connection of pipes and conduits as well as tests and preparations ahead of the production start. The Alen platform will have the capacity to produce up to about 40,000 barrels of condensate per day and to reinject up to 440 million cubic feet of gas per day. The project is progressing according to plan and the cost trend indicates that the total cost for the project will be under budget. The production start has been brought forward slightly to the third quarter of 2013. The intention is to progress the undeveloped fields to development to utilise capacity made available as Aseng declines. This means favourable opportunities for continued production for PA Resources in the longer term. Studies also continue to develop a plan for the commercialisation of the significant discovered gas resources in Block I. Bioko Island Held Acreage Gas Gas/condensate Oil Oil and gas Block O CamerOOn EQUatorial guinea Alen Field Carla Discovery Diega Field Atlantic Ocean Key facts about the Alen field Gas/condensate field in Block I/Block O, the Gulf of Guinea Production to start in the third quarter of 2013 About 100 barrels of oil equivalents per day net to PA Resources Production of condensate with reinjection of gas for future possible sales Utilises the Aseng FPSO for condensate storage and offloading Infrastructure for future gas development Aseng Field 0.29% working interest (after unitisation between Block I/Block O) N 0 Scale 10 kms Block I PA Resources Yolanda Discovery PA RESOURCES ANNUAL REPORT 2012 15

OPERATIONS PRODUCING FIELDS Producing fields generate cash flow When a field is taken into production, the investment in the asset starts to be repaid through cash flow generated by the field. The return from producing fields comprises the foundation for PA Resources continued growth which is why operating expenditures in these fields must be prioritised. During the year, the Azurite field continued to disappoint and the field s reserves were further reduced. Production from the Aseng field was stable at around 60,000 barrels per day and the field s investments were recouped already in the second quarter, which gave PA Resources a profitable return. Production from the Didon field, the largest producing field in Tunisia, declined gently as expected. Since November 2011, the Aseng field has produced more than 27 million barrels. Production in 2012 PA Resources average production was 7,900 barrels per day with a peak of 9,300 barrels in January and a low of 7,100 barrels per day at the end of the year. Of a total of six producing fields, two larger fields are offshore in West Africa the Aseng field in Equatorial Guinea and the Azurite field in the Republic of Congo (Brazzaville). The third larger field, the Didon field in Tunisia, is also offshore. The other three smaller producing fields are onshore in Tunisia. Production at the smaller onshore fields in Tunisia was impacted by the social unrest in the region as a consequence of the ongoing democratisation process in the country, which resulted in temporary field closures in the second and third quarters. Producing fields TUNISIA 1 Didon O 2 Douleb O 3 Semmama O 4 Tamesmida O RepubliC OF Congo (Brazzaville) 5 Azurite P EQUatorial guinea 6 Aseng P O= PA Resources operator P= PA Resources partner 2 3 4 6 5 1 16 PA RESOURCES ANNUAL REPORT 2012

OPERATIONS PRODUCING FIELDS Equatorial Guinea: Stable production plateau at the Aseng field The Aseng field is located in the Gulf of Guinea, offshore Equatorial Guinea, in an approximate water depth of 1,000 metres. In November 2011, the field was brought into production and in March 2012, the fifth and last production well was brought into operation in parallel with the commencement of reinjection of gas. The field s production increased gradually during the first and second quarter from the planned level of slightly more than 50,000 barrels per day to a level slightly above 60,000 barrels of oil per day which was maintained through year end 2012. Since its production start, the field has produced more than 27 million barrels, which contributed slightly more than 1.5 million barrels net to PA Resources. The investment cost totalled about USD 10 per barrel for development and PA Resources total investment of SEK 500 million was repaid in the second quarter. The oil is collected six to nine times per quarter through liftings, which generates a steady cash flow for PA Resources. The floating production, storage and offloading vessel Aseng FPSO will be used for the storage and offloading of oil and condensate from the Alen field. Accordingly, the cost per barrel produced is expected to decrease as a consequence of cost sharing between the fields. The Aseng infrastructure can also be utilised for other future developments of adjacent discoveries (see the preceding section for more details about ongoing activities). PA Resources has a 5.7% working interest in the field and the operator Noble Energy has 38%. Other partners include Atlas Petroleum, Glencore and the state-owned oil company GEPetrol. Republic of Congo: Reduced reserves in the Azurite field The Azurite field lies offshore in the Mer Profonde Sud licence in the lower part of the Congo Basin, about 130 kilometres from the coast. The water depth is about 1,400 metres. In August 2009, the first well in the Azurite field was brought into production. Through development with the floating, drilling, production, storage and offloading (FDPSO ) vessel, wells were gradually brought into production up to June 2011, when the field was fully developed. As detailed earlier, production levels were significantly lower than those in the plan for the field s development. At the beginning of 2012, one of the six producing wells experienced technical complications in the well s completion, which led to minimal production levels from the well and thus reduced production. Technical analysis resulted in the licence group deciding to drill a new sidetrack. Preparation commenced in the failed well but technical complication meant the well could not be sidetracked and as a result it was plugged and abandoned. While the field continues to produce, possible future activities aimed at optimising the field s production are being evaluated. PA Resources share of production in 2012 was almost 10,000 barrels per day lower than originally planned and recovery of the full development investment is not assessed as possible. Accordingly, the field s entire remaining value was impaired in the third quarter. PA Resources has a 35% working interest in the field and the operator Murphy Oil has 50%. The other partner is the state-owned company SNPC. Tunisia: Stable production from the Didon field PA Resources largest producing field, from a historical perspective, is the Didon field in the Gulf of Gabes about 70 km offshore Tunisia and is part of the Zarat licence. The field is in a water depth of 70 metres and has produced about 32 million barrels of oil since production start in 1998. Production from the Didon field was in stable decline in 2012. Production is primarily from two wells with intermittent contribution from a third well. PA Resources has evalu ated the possibility of adding additional production wells and the installation of electric submersible pumps (ESPs) in existing wells, to provide artificial lift, which has been evaluated as a technically and commecially feasible option. PA Resources has a 100% working interest in the field. Focus for 2013 Evaluate possible measures at the Azurite field in the Republic of Congo Continued production at the Aseng field in Equatorial Guinea Invest in operations and installation of ESPs at Didon field in Tunisia Average production per country and field (barrels per day) 12,000 10,000 8,000 6,000 4,000 2,000 PA Resources sales prices compared with Brent (USD per barrel) 140 120 100 80 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2011 2011 2011 2012 2012 2012 2012 Congo: Azurite EG: Aseng Tunisia: Didon & Onshore 60 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2011 2011 2011 2012 2012 2012 2012 PA Resources Brent PA RESOURCES ANNUAL REPORT 2012 17

OPERATIONS MARKET Market A rekindling of the ongoing sovereign-debt crisis in many European countries and geopolitical tensions contributed to the oil price remaining high in 2012. The average price of Brent oil reached its highest ever historical average at USD 112 per barrel. The trend in the global economy over the next few years is difficult to access. In the long-term, demand for oil is expected to increase primarily driven by increasing consumption levels in growth economies. Trend in 2012 Since the onset of the global recession in 2008, the oil market has been plagued with conflicting signals. Slow economic growth in combination with improved energy-efficiency initiatives has had a negative impact on the global demand for oil. In parallel, geopolitical tensions, particularly in North Africa and the Middle East, have increased risk levels for the global supply of oil. Oil production in North America rose significantly due to increased production of shale-oil while other oil-producing countries outside of OPEC noted declining production, to some extent due to production stoppages. Despite the above, the price of Brent oil remained at a high average level of USD 112 per barrel, which was USD 1 per barrel higher than the preceding year. A peak of about USD 128 per barrel was briefly touched in March and a low of about USD 89 per barrel in June. According to the International Energy Agency (IEA), global demand was 89.7 million barrels per day (88.9) in 2012, up 0.9% year-on-year. Increased demand in growth economies The IEA estimates demand in 2013 to be about 90.5 million barrels per day, this estimate is based on demand increasing in the growth economies and continuing to decline in OECD countries. The major risks for supply in 2013 are assessed as geopolitical tensions in Iran and Nigeria, which can negatively impact production. Since the start of 2013, the oil price has remained at continued high level. Should the oil price decline from current levels to an interval between USD 90 and 100 per barrel this will still provide PA Resources with a healthy cash flow. The global oil market is expected to undergo extensive regional changes over the next few years. Various regional driving forces for production and consumption are expected to have a major impact on how the global trade and processing of oil is geographically distributed. Global demand for energy is forecast to rise by one-third by 2035. Countries experiencing robust economic growth and, accordingly, increasing industrial activity and a rapidly growing transport sector, such as China, India and several of countries in the Middle East, are expected to account for 60% of the increase. Weak demand in the OECD countries is influenced by slow growth or declining populations as well as economies with low growth. This applies, not least, to Europe where the debt burden in the EU area is a significant contributing factor. Furthermore, more stringent regulations and laws regarding the energy efficiency of private motor vehicles are expected in several OECD countries. Increased production in North America The production capacity of the OECD countries is expected to decline in line with unreliable access to increased oil reserves and aging existing fields. In parallel, North America is favoured through access to new raw materials, low energy costs, economies of scale and advanced technology. The future oil price trend is assessed as volatile due to a greater general degree of risk. However, the oil price is expected to rise and amount to USD 125 per barrel by 2035 according to the IEA. This is primarily due to increased demand from the transport sector given the lack of alternative fuel, thus reducing price-sensitivity for oil. In addition, production growth is limited by the increasing cost of finding new sources of oil and the increasing duration of new development projects. The oil price is susceptible to the following factors: 160 140 120 100 80 60 40 20 0 The global economy The European sovereign-debt crisis and concern regarding global growth as well as monetary policy stimulus packages from many central banks The political situation Geopolitical turbulence, for example in the Middle East and parts of Africa Access to oil A natural decline from existing fields that successively reduce capacity for additional production Weather conditions Unforeseen natural disasters, such as the tsunami in Japan in 2011 or hurricane Sandy in North America in 2012 OPEC decisions and regulations OPEC is expected to play an increasingly important role in the oil market in the future, with gradually increasing production The price of alternative energy sources Increased competition from alternative forms of energy and fuel Brent price development 2007 2012 (USD per barrel) 5,000 4,000 3,000 2,000 1,000 2007 2008 2009 2010 2011 2012 Source: BP och Platts. Forecast of global oil consumption per sector (Million tonnes of oil equivalent) 0 2009 2015 2020 2025 2030 2035 Transport Industry Buildings Other* *Other includes agriculture and non energy use consumption. Source: IEA World Energy Outlook 2011. 18 PA RESOURCES ANNUAL REPORT 2012

OPERATIONS Sustainability Sustainability PA Resources has established a management system that defines the objectives, procedures and practices to manage its business unit s activities. Underpinning this management system are recognised responsibilities within three key and inter-related areas; economic, environmental and social. A sustainable business is achieved through PA Resources proactive management of all three areas. Sustainable operational steering The PA Group performs its work programmes and operational activities with care and respect for both human life and the environment. These responsibilities allow us to set out Health, Safety and Environmental (HSE), Social Responsibility (SR) and Ethical and Transparency principles which are incorporated in our management system. These high level principles are established at Board level within PA Resources whilst compliance with the management system is a line management responsibility. Where PA Resources is the licence operator, the Group has direct responsibility for the operations and employees as well as health, safety and environmental issues and for community relations and social programmes. For licences in which the Group is a partner, the respective operators have the direct responsibility for this work and are monitored by PA Resources and the licence group s other partners. PA Resources has adopted a zero incidents philosophy, which means our targets are no accidents to personnel, no unwanted incidents involving our activities and no accidental discharges to land, sea or air. To this end the PA Group of companies complies with all applicable laws, regulations and industry codes and endeavours to achieve performance standards across the Group consistent with those achieved in the most onerous regulatory regimes. Reporting and continuous improvement target Each region in the PA Group has an HSE Manager responsible for monitoring and reporting on health, safety, environmental and social matters, promoting best practices and ensuring management system compliance. The regions report to the Group Management on a quarterly basis. Continual improvement is a core tenet of the Group s management systems and PA Resources seeks to enhance its planning, operational and production competences at every opportunity. Improvements are also invariably required in response to drivers such as changing business circumstances, legal changes and a desire to refine and improve our own internal organisational practices. These changes are accomplished through periodic audit, corrective and preventive action initiatives and senior management reviews and responses. Social Responsibility Contributing to society PA Resources endeavours to make a positive socio-economic impact in the countries in which the Group has activities. Revenues from oil production are especially important contributors to the development of many African states but the Group seeks to also make a direct positive impact at community level. Good practice of social responsibilities takes account of a number of themes and indicators including obligations under the conditions of the operating licence, local legislation and industry requirements Enhance Social Development Social Investment and Progress Create Employment Opportunity Provide Social Stimulus Enhance Local Work Force Skills Local Taxes/Royalties Income Social Responsibility Financial and Economic Responsibility Sustainability Environmental Efficiency Improve Resource Management Conservation and Protection Safeguard Resources Production Life-cycle Management Environmental Responsibility Social-Environmental Impacts Improve Health and Safety Culture Provide HSE Management Manage Local and Global Environmental Effects Mitigate and Ameliorate Environmental Impacts Enhance Management Capabilities as well as Governmental and national agency policy. At a community level, good practice also seeks to account for recommendations and requests, existing social initiatives, resource availability, the levels and types of local provisions and the skills and proficiencies available. Such considerations provide a framework for determining and implementing suitable social programmes and project investments. PA Resources seeks a positive social engagement where possible through community liaison and interaction, local recruitment programmes, the support and development of local business and the provision of additional medical capabilities, training and education schemes. The direct engagement is undertaken by the operator for the respective licence or PA Resources where the company holds the operating responsibility. One way of contributing to the society s development is by different employment initiatives. In The Republic of Congo (Brazzaville) efforts continue towards raising the national content of the work force by different training and education activities. PA RESOURCES ANNUAL REPORT 2012 19

OPERATIONS Sustainability Projects PA Resources supported throughout the year Monitoring of clean water wells provided to the communities of El Porvenir and Atepa in Equatorial Guinea. Two further wells have been provided for communities at Mobue-Esakunan and Asong-Mesuse during 2012. A number of educational provisions including funding of a library and computer lab with adjacent study area at the Technical College Instituto National Educacion Media (INEM) in Malabo, provision of six additional new school rooms plus a small library and bathroom facilities at the Nuestra Sra. De Africa School in Mongomo and the building of a six room school house for 200 preschool infants in Riaba. Co-funding of the supply of 10 ambulances to various hospitals and health care centres across Congo. Medical equipment has also been supplied to 4 hospitals. Donations to the Mines Advisory Group (MAG) to support mine and munitions clearance projects particularly in the Republic of Congo where a devastating munitions depot explosion occurred early in 2012. PA Resources co-funded the ambulance project in Congo. Environmental Responsibility PA Resources recognises that its operations may have impacts on the environment where the company conducts operations and activities. The vision is to become a lower carbon user as part of a low-carbon economy, taking responsibility for our resource generation and usage in a responsible way. PA Resources UK operates an environmental management system which is certified in accordance with the ISO 14001:2004 standard. In addition, the system is certified to the international standard for office health and safety, ISO 18001. Oil and gas activities invariably influence the environment to some degree and PA Resources works to minimize the environmental impact of its operations. The Group undertakes environmental impact assessments during the planning stages of all major projects and operations with a view to identifying risks and potential hazards to allow the company to develop mitigating measures to avoid or minimize any adverse effects. Environmental performance is then monitored during the life of each project. Where necessary the company also provides the resources, facilities, advice and expertise to ensure implementation of pollution prevention measures. All aspects of our pollution management and control schemes are monitored and audited for compliance and contingency plans for emergency situations are developed. Emissions PA Resources implemented a system for measurement of the Group s environmental performance in 2009 and has reported outcomes since 2010. Key environmental ratios and performance indicators are set out in the table on page 21. In 2012 the facilities in Tunisia and Congo continued to decrease their overall levels of emissions in line with declining levels of oil production thus partially offsetting an increase in emissions reflecting a full year s production at the Aseng offshore facilities in Equatorial Guinea. The majority of gas produced on the Aseng vessel is re-injected for later commercial production, with a portion used for power generation purposes on the vessel, or flared. In Tunisia, produced water increased related to the number of wells in production and fuel consumption increased as a result of additional oil storage and ballast-tank cleaning exercises. Additionally, water discharges on the Azurite field were reduced due to failure of a high water rate well. There were no accidental oil emissions in 2012. Emergency Response PA Resources implements measures to prevent the occurrence of accidents and incidents such as fires, unintentional emissions of pollutants, maritime or helicopter accidents, and the Group maintains a high level of emergency preparedness. Each business region has emergency response and crisis management plans in place for operations where PA Resources is the operator. Emergency response exercises and risk assessments are performed regularly and prior to operational projects. Health and Safety One of the most critical areas of management is ensuring the health and safety of our employees and contractors as well as minimizing the risk of accidents and incidents that might affect people, the environment, assets and finances. The Group continues actively pursuing training and accident preventative initiatives in the areas of health and safety with the aim of safeguarding employees and, furthermore, subcontractors from work-related injuries, diseases and workplace accidents. At the end of 2012, PA Resources employed 124 people as well as a number of consultants and sub-contractors. During the past five years, no work-related fatalities have occurred at any production facility where PA Resources is the operator and, furthermore, no serious incidents, accidents or injuries have occurred over the same period. No incidents occurred that resulted in lost time incidents (LTIs) or recordable injuries. For annual statistics, see www.paresources.se/sustainability Employee training and development Worker s training and development promotes organisational efficiency, encourages a conscientious culture and improves external perceptions of the company. 20 PA RESOURCES ANNUAL REPORT 2012

OPERATIONS Sustainability Impact Description of environmental impact Prioritized measures 2010 to 2012 Environmental ratios* 2012 2011 2010 Flared gas Atmospheric emissions primarily comprise To continue to monitor and measure Flaring natural gas daily average (Million cubic 2.57 3.95 5.30 and Greenhouse carbon dioxide emissions through our emissions, which will enable us feet): gas emissions the combustion of gas at our production to set goals for reducing the flaring of facilities and fuel for transportation. natural gas and decreasing our emissions Flaring natural gas total (Million cubic feet): 934 1,440 1,940 of carbon dioxide. Carbon dioxide emissions flaring gas (Tonnes): 81,485 110,530** 172,976** Carbon dioxide emissions fuel consumption (Tonnes)**: 60,945 61,096** 36,881** Spills to the Environment (Emissions to land and sea) Fresh Water / Produced water / Discharges to Water Unintentional discharges of oil and chemicals cause injuries to animals and people as well as pollute oceans, land and groundwater. A mixture of oil, gas and water is pumped up from a production well. The water is separated from the mixture but may contain traces of hydrocarbons and chemicals. To work proactively to minimize the risk of accidental emissions, for example through risk assessments, careful planning, improving technology and working methods, education and training as well as monitoring. Minimizing the usage of chemicals is a priority. To purify the produced water to approved levels before its release into the sea or reinjection into reservoirs. Accidental emissions chemicals (Number of releases): Accidental emissions hydrocarbons (Number of releases): 6 0 0 0 3 8 Accidental emissions hydrocarbons (Litres):*** 0 1,040 1,016 Emissions - produced water (barrels per day): 6,540 8,212 9,888 Total emissions - produced water (barrels) 1,757,609 2,997,560 3,609,280 Concentration of oil in water, average (Ppm/mg/l): 22 18 21 Total emissions of oil in produced water (Litres): 10,351 11,340 12,110 Energy use (Energy consumption) The energy consumption of business activities, primarily of fossil fuels, contrib utes to increased carbon emissions and climate change. To increase the efficiency of production facilities thus lowering energy consumption this then contributes to lowering costs and reduced carbon emissions. Natural Gas Consumption daily average (Million cubic feet): Natural Gas Consumption total (Million cubic feet): 1.4 1.4 1.16 498 494 424 Alternative Energy Sources Energy sources, including low-carbon energy sources and utilising non-fossil fuel energy, particularly alternative and renewable energy resources To substitute energy sources at production facilities by more sustainable means leading to a lowering of costs and reduction in carbon emissions. Use of Solar Energy / Wind Energy / Heat Recycling (KwH) 0 0 0 Biodiversity and Ecosystem services Other Air Emissions Waste Disturbance of wildlife Operational activities can impact local biodiversity and ecosystem services. Substances include: volatile organic compounds (VOCs); oxides of sulphur (SOx); oxides of nitrogen (NOx), excluding N 2 O; particulate matter (PM); ozone-depleting substances (ODS); and other regulated air emissions. The operations utilise natural resources and other material that generate waste such as oil containing mud, drilling mud, chemical residues, construction waste and household waste. Acoustic signals utilised in seismic surveys can temporarily disturb wildlife. On production fields, the noise from drilling rigs, vessels and other machines can disturb wildlife, which can affect their migration routes. To control and manage impacts and dependencies. Gauge risks and assess opportunities within their geographical context. Gauge impacts in context with the type of activity or operation being conducted. To reduce air emissions from oil and natural gas operations which may contribute to local or regional impacts such as regional haze or acid rain. To minimise the amount of waste through recycling and reuse. Fragments of stone that have broken loose from the bedrock can be separated from the thick drilling mud and released if assessed as being sufficiently clean. To utilise various methods to minimise or mitigate disturbances. The company performed environmental risk and hazards assessments during 2012 relating to operations in the following countries: United Kingdom, Tunisia, Greenland and the Netherlands. Some measurements of air emissions in Equatorial Guinea and Congo are now occurring on a regular basis. PA Resources is endeavouring to capture and collate these data from the various sources and integrate them during 2013. Waste generated is highly dependent on the number and type of projects being undertaken. PA Resources have not yet commenced to gather and collect this data on a Group basis. In 2012, waste was appropriately disposed of in line with local regulations and permits. There were no instances of disturbance to wildlife reported during our operations in 2012. * States PA Resources Working Interest of total volumes and amounts. Statistics depend on produced volumes of oil and the number of drilling projects and development projects conducted during the period. ** Includes liquid fuels from 2011 onwards 2010 and 2011 restated. *** The stated accidental emissions figures are gross volumes for PA Resources and its licence partners, all other figures in this table state PA Resources Working Interest of total volumes and amounts. Business ethics and transparency PA Resources is committed to ensuring it conducts its business responsibly, legally, professionally and with integrity. PA Resources does not accept any kind of bribery or facilitation payments. All employees and contractors are expected to follow the implemented policies and standards. The management system encourages employees to be responsible and report any concerns they have and are supported by the company s policies and procedures to prevent employees from violating applicable anti-bribery and/or anti-corruption laws. Bribery and facilitation payments are illegal and have an extremely negative impact on business activities, licences and partnerships as well as the host countries in which the Group operates. In 2011, PA Resources subsidiary in the UK implemented a new Anti-Corruption Policy containing guidelines aimed at ensuring compliance with the new UK Bribery Act. The new legislation applies to PA Resources UK and its employees and contractors. The new policy has been implemented and UK employees have received specific training on the subject. During the past two years, PA Resources initiated evaluations of corruption risk with regard to new business partners, agents, subcontractors and employees. In 2012, new and more stringent anti-corruption legislation was also introduced in Sweden which included an indirect requirement for executive management to implement internal anti-corruption measures. There were no reported incidents of non-compliance with our policy during the review period. The efforts will continue in 2013. PA RESOURCES ANNUAL REPORT 2012 21

OPERATIONS the share PA Resources share PA Resources share, convertible bond and SEK bond are listed on the NASDAQ OMX in Stockholm. In 2012, the share was listed on the Mid Cap segment but since January 2013 moved to the Small Cap segment. The share had relatively high liquidity and an average daily turnover of approximately SEK 7 million in 2012. Liquidity The ticker symbol of the share is PAR and the trading lot is 200 shares. In 2012, 1,938 (2,103) million shares were traded with a value of SEK 1,863 million (7,546) on the NASDAQ OMX Stockholm Mid Cap segment. As in preceding years, share turnover or liquidity in the PA Resources share was high. Share turnover amounted to 239 percent (328), compared with 46 percent for Mid Cap and 77 percent for Large Cap in Stockholm. On average, share turnover amounted to 7.5 million shares per day (8.3) with a value of SEK 7.8 million (29.8). Share price trend in 2012 Over the year, PA Resources share price declined by 91 percent (72) and the closing bid price for the share at the end of 2012 was SEK 0.20 (2.12) corresponding to a market capitalisation of SEK 127 million. The highest price paid for the share was SEK 2.43 on 9 January and the lowest was SEK 0.13 on 4 December. The average price was SEK 1.18. The prices were based on the number of A-shares at yearend and, accordingly, the prices are unadjusted. Share capital and new issues In the first phase of strengthening the company s financial position, a set-off issue of convertible bonds was performed in December to convertible bondholders in the company and was followed by a fully underwritten rights issue that was completed in early 2013. A new Articles of Association was adopted by the Extraordinary General Meeting on 7 December 2012 to adjust the limits applicable to the company s share capital and number of shares. The meeting also resolved to reduce the quota value from SEK 0.50 to SEK 0.10 per share. A temporary B-share was introduced during the issue processes to facilitate the administrative process for the new issues. Approximately 90 percent of the convertible bonds, including accrued interest, were converted to new B-shares through the setoff issue. A total of 6,455,770,272 new B-shares were issued, which meant that the total number of shares at year-end 2012 was 7,093,247,924, of which 637,477,652 were A-shares and the share capital was SEK 709,324,792.40. The subsequent fully underwritten rights issue increased PA Resources share capital by SEK 705,275,104.80 to SEK 1,414,599,897.20 and the number of shares increased by 7,052,751,048 shares to 14,145,998,972 shares. The B-shares automatically converted to A-shares in conjunction with the completion of the rights issue in early February 2013 and were eligible for trading from 7 February, thereby leaving the company with just one class of share in issue with equal voting rights and equal claims on the company s capital and earnings. Ownership structure At 31 December 2012, the total number of shareholders was 21,996 (26,745) and at 8 February 2013, following the rights issue, the total number of shareholders was 24,027. The proportion of foreign ownership amounted to 36 percent of the total number of shares. Major changes ensued for PA Resources ownership structure as a result of the completed issues. Accordingly, the company has elected to report the largest shareholders as of 8 February 2013, which provides the first look at the ownership structure after the new issues. At the top of the list of shareholders is Avanza, which is not one single owner and represents a larger number of private shareholders through endowment policies. PA Resources largest institutional owner is Gunvor Group Ltd. PA Resources convertible bond PA Resources convertible bond (PAR KV1) is traded on the NASDAQ OMX Stockholm. A trading block amounts to SEK 16.00 which is equal to the nominal amount of SEK 16.00. The lifetime of the convertible bond extends until 15 January 2014 with a fixed annual interest of 11 percent. The convertible bonds can be converted into shares in September each year with the final occasion in September 2013. The former conversion price of SEK 16.00 was adjusted to SEK 8.52 due to the new issue of shares in 2010 and in conjunction with the rights issue in 2013 the conversion price was readjusted to SEK 6.49. See Note 23 on page 65 and Note 34 on page 75 for information regarding the set-off issue and convertible bonds outstanding. Share price history 2010-2012 Holdings per shareholder category 10 9 8 7 6 5 4 3 2 1 0 450 400 350 300 250 200 150 100 50 0 PA Resources share OMXS Shares traded (million) 15% Financial and institutional investors 25% Companies 25% Swedish private shareholders 33% Private shareholders domiciled abroad 2% Public sector and interest groups 2010 2011 2012 22 PA RESOURCES ANNUAL REPORT 2012

OPERATIONS the share Distribution of holdings by size per 8 February 2013 Number of shareholders Number of shares Holding 1-50,000 16,320 174,990,905 1.2% 50,001-100,000 2,448 179,767,899 1.3% 100,001-500,000 3,485 779,985,994 5.5% 500,001-1,000,000 759 532,367,399 3.8% 1,000,001-5,000,000 747 1,571,393,734 11.1% 5,000,001-10,000,000 112 740,572,580 5.2% 10,000,001-50,000,000 110 2,573,318,583 18.2% 50,000,001-100,000,000 27 1,936,792,321 13.7% 100,000,001-500,000,000 14 2,741,262,697 19.4% 500,000,001-4 2,915,546,860 20.6% Total 24,027 14,145,998,972 100.0% Ownership structure 10 largest shareholders The 10 largest shareholders per 8 Feb. 2013 Number of shares Capital/ votes Avanza Pension 935,551,216 6.6% Gunvor Group Ltd 910,403,811 6.4% Credit Agricole (Suisse) SA 542,777,600 3.8% SEB S.A. 523,532,273 3.7% AB Traction 427,502,111 3.0% Nordnet Pensionsförsäkring AB 390,914,762 2.8% Ågerup Fastigheter AB 383,657,805 2.7% LUX-non-resident/domestic rates 273,121,144 1.9% JP Morgan Bank 201,098,730 1.4% Originat AB 185,549,311 1.3% Total 10 largest shareholders 4,774,108,763 33.7% Total other shareholders 9,371,890,209 66.3% Total number of shares 14,145,998,972 100.0% Per share data five-year overview 31 Dec. 2012 31 Dec. 2011 31 Dec. 2010 31 Dec. 2009 31 Dec. 2008 Operating profit per share after dilution, SEK -1.28-2.39 0.94 1.35 4.64 Income after financial items per share after dilution, SEK -2.00-2.94 0.34 1.00 2.74 Earnings per share after dilution, SEK -2.36-3.27-0.61 0.04 3.08 Equity per share before dilution, SEK 0.22 4.42 7.54 13.41 15.86 Equity per share after dilution, SEK 0.22 4.42 7.54 13.41 15.8 Share price at end of period, SEK 0.20 2.12 7.50 11.93 5.58 Share price/equity per share before dilution 0.89 0.48 0.99 0.89 0.35 P/E multiple per share -0.08-0.65-12.36 295.22 1.81 Number of shares outstanding before dilution 7,093,247,924 637,476,893 637,475,843 345,814,769 299,968,388 Number of shares outstanding after dilution 7,093,247,924 637,476,893 637,475,843 345,814,769 300,999,108 Average number of shares outstanding before dilution 832,034,544 637,476,105 521,614,740 318,998,246 299,427,260 Average number of shares outstanding after dilution 832,034,544 637,476,105 521,614,740 318,998,246 300,921,829 Share capital development Year Type of changes Quota value, (SEK/share) Changes in shares outstanding Total shares outstanding Change in share capital (SEK) Total share capital (SEK) 2009 Private placement 0.5 11,000,000 156,514,004 5,500,000.00 78,257,002.00 2009 Conversion, convertible bonds 0.5 11,239,978 167,753,982 5,619,989.00 83,876,991.00 2010 Rights issue 0.5 469,711,149 637,465,131 234,855,574.50 318,732,565.50 2010 Conversion, convertible bonds 0.5 10,712 637,475,843 5,356.00 318,737,921.50 2011 Conversion, convertible bonds 0.5 1,050 637,476,893 525.00 318,738,446.50 2012 Conversion, convertible bonds 0.5 759 637,477,652 379.50 318,738,826.00 2012 Decrease in share capital 0.1-637,477,652-254,991,060.80 63,747,765.20 2012 Set-off issue convertibles 0.1 6,455,770,272 7,093,247,924 645,577,027.20 709,324,792.40 2013 Rights issue 0.1 7,052,751,048 14,145,998,972 705,275,104.80 1,414,599,897.20 Dividend policy The primary objective is to add value for the company s shareholders and employees through continued investment in business activities that create profitable and long-term production growth. Over time, the total return to shareholders is expected to increasingly become attributable more to the increase in share price than to dividends received. As in previous years, the Board of Directors recommends that no dividend be paid for 2012.! The share price trend from 1994 is available at www.paresources.se/en/investor_relations/the-share/ PA RESOURCES ANNUAL REPORT 2012 23

Licence overview Greenland Exploration/Appraisal North Sea Region and Greenland Development Production United Kingdom Denmark Country/licence Operator Partners uk 1 Block 22/19a PA Resources (50%) First Oil and Gas Limited (50%) DENMARK Greenland 2 Block 9/06 (Gita) Maersk Olie og Gas (31.2%) PA Resources (26.8%), Nordsøfonden (20%), Noreco (12%), Danoil (10%) 3 Block 12/06 PA Resources (64%) Nordsøfonden (20%), Spyker Energy (8%), Danoil (8%) United Kingdom Denmark Netherlands Germany NETHERLANDS 4 Block Q7 Smart Energy Solutions (30%) Energie Beheer Nederland (40%), PA Resources (30%) 5 Block Q10a Smart Energy Solutions (30%) 6 Schagen Smart Energy Solutions (30%) GERMANY Energie Beheer Nederland (40%), PA Resources (30%) Energie Beheer Nederland (40%), PA Resources (30%) Netherlands Germany 7 B20008-73 PA Resources (90%) Danoil (10%) Tunisia GREENLAND 8 Licence 2008/17 (Block 8) PA Resources (87.5%) NunaOil (12.5%) North Africa Region Country/licence Operator Partners TUNISIA 1 Douleb PA Resources (70%)* Serept (30%) 2 Semmama PA Resources (70%)* Serept (30%) 3 Tamesmida PA Resources (95%)* Serept (5%) 4 Didon PA Resources (100%) 5 Jelma** PA Resources (70%) Topic (30%) 6 Makthar** PA Resources (100%) 7 Zarat** PA Resources (100%) 8 Jenein Centre*** Chinook Energy Inc (65%) PA Resources (35%) Tunisia * Operatorship is outsourced to Serept. ** ETAP has the right to take a 50% interest in the Jelma licence and 55% in the Makthar and Zarat licences once discoveries have been made on the respective licences and a development plan has been submitted. Until such time, ownership is shared as shown above. *** ETAP is the sole licence holder, but has signed a production-sharing agreement with PA Resources and Chinook Energy. Equatorial Guinea West Africa Region Country/licence Operator Partners RepubliC OF Congo (Brazzaville) 1 Azurite* Murphy (50%) PA Resources (35%), SNPC (15%) 2 Mer Profonde Sud* Murphy (50%) PA Resources (35%), SNPC (15%) Equatorial Guinea Republic of Congo EQUatorial guinea 3 Aseng** Noble Energy (38%) Atlas Petroleum (27.55%), Glencore (23.75%), PA Resources (5.7%), GEPetrol (5%) 4 Alen*** Noble Energy (44.65%) GEPetrol (28.75%), Glencore (24.94%), Atlas Petroleum (1.38%), PA Resources (0.29%) 5 Block I** Noble Energy (38%) Atlas Petroleum (27.55%), Glencore Exploration (23.75%), PA Resources (5.7%), GEPetrol (5%) 6 Block H** White Rose Energy (46.31%) Atlas Petroleum (23.75%), Roc Oil (19%), PA Resources (5.94%), GEPetrol (5%) Republic of Congo * Participating interests are reported inclusive of the rights to participating interests of the state-owned company SNPC. ** Participating interests are reported from and including 2011 inclusive of the rights to participating interests of the state-owned company GEPetrol. *** 95% of the Alen field is located in Block O and 5% in Block I. PA Resources has a 5.7% working interest in Block I, which provides 0.29% of the field in total. 24 PA RESOURCES ANNUAL REPORT 2012

Board of Directors Report regions Board of Directors Report 2012 PA Resources AB (publ), corporate identity number 556488-2180 PA Resources is an international oil and gas group which conducts exploration, development and production of oil and gas properties. The Group owns assets in: West Africa, North Africa, the North Sea and Greenland. Oil is produced in West and North Africa. Key events by region West Africa The region contains two producing fields located in Aseng in Equatorial Guinea and Azurite in the Republic of Congo (Brazzaville). Since its production start in November 2011, Aseng has generated a steady cash flow. The development of the Alen field is also ongoing in Equatorial Guinea. The Group also has working interests in three exploration licences. PA Resources is not operator for any of the licences and operations in the region are run from the London office. Production at and impairment of the Azurite field The Azurite field has performed well below projected levels. Since the side track proved impossible to drill other activities are now under going evaluation at the field. Lower recover able reserves resulted in a total impairment of the field s value of SEK 1,315 million in the third quarter. Thereafter, continued investment in the field has been expensed. Production at the Aseng field In 2012, the Aseng field in Block I produced a total of 22.6 million barrels of which PA Resources share was 1.29 million barrels. In the fourth quarter, production was 60,500 barrels per day, which gave PA Resources 3,400 barrels per day. Development of the Alen field A high pace of development was maintained for the Alen field in Block I and the field is expected to start production in the third quarter of 2013. The increase in production will only be modest but will provide PA Resources with a lower cost per barrel produced given the cost synergies between the Aseng and Alen fields infrastructure. Relinquishment of Marine Xiv Following the evaluation of further exploration potential on the licence, the licence group decide to relinquish the licence which resulted in an impairment loss of SEK 174 million in the third quarter. North Africa PA Resources has been operating in Tunisia since 1998. The company s offshore oil production from the Didon field is supplemented by three smaller onshore fields and development planning is ongoing for the Zarat field Tunisia s largest undeveloped oilfield. PA Resources conducts exploration on four exploration licences and is the operator of a total of seven licences. The largest proportion of the Group s employees is stationed on the production fields and at the regional office in Tunis. Production at the Didon field Production at the Didon field was stable throughout the year and measures were implemented on an ongoing basis to reduce the field s natural decline in production. Production at onshore fields On a couple of occasions during the second and third quarter, the three smaller onshore fields: Douleb, Semmama and Tamesmida were shut down due to social unrest in the region. Preliminary agreement for the Zarat field In December, a preliminary agreement was reached on the principles for the unitisation of the Zarat field with Sonde Resources, which is the operator of the Joint Oil licence north of the Zarat licence. Ongoing farm-out of the Zarat licence The process of farming out working interests in the Zarat licence was started in the third quarter and is continuing with various activities and interested parties. The North Sea and Greenland PA Resources conducts exploration activities in the UK, Denmark, the Netherlands, Germany and offshore western Greenland. No production comes from this region and PA Resources is the operator of four out of a total of eight licences, including the Danish licence 12/06, where the two discoveries Broder Tuck and Lille John were made in 2011. The region s operations are run from the London office. Extension of the Danish licence 12/06 In 2011, a gas/condensate discovery was made at Broder Tuck and an oil discovery at Lille John. Work continued to establish the commerciality through assessment of alternative development scenarios in parallel with activities to identify a rig for additional drilling at Lille John. The licence was extended until May 2014. Extension of the Danish licence Gita and relinquishment of Maja Licence 9/06 (Gita) was extended until May 2014 and in the second quarter of 2012, PA Resources relinquished its working interest in licence 9/95 (Maja) due to the costly and highrisk drilling commitments associated with the licence. The book value of the licence was charged with an impairment loss of SEK 89 million in the second quarter. New UK licence In October, PA Resources was provisionally awarded the licence for Block 22/19a in the 27th UK licensing round. The licence includes the undeveloped Fiddich gas/condensate field. Relinquishment of two UK licences Following detailed studies, licence P1342 (Block 17/4b) was relinquished with effect from December 2012, and licence P1802 (Block 22/18c) was relinquished with effect from January 2013. An impairment charge of SEK 18 million was recognised in the fourth quarter of 2012. Farm-out of German licence In November, PA Resources decreased its working interest in the German licence B20008/73 by farming out 10 percent to Danoil Exploration A/S. Key ratios, West Africa 2012 SEK 1,000 million in booked exploration and evaluation assets SEK 520 million in booked oil and gas properties SEK 220 million in investments 5,600 barrels per day in production Key ratios, North Africa 2012 SEK 1,734 million in booked exploration and evaluation assets SEK 1,606 million in booked oil and gas properties SEK 6 million in investments 2,300 barrels per day in production Key ratios, North Sea and Greenland 2012 SEK 664 million in booked exploration and evaluation assets SEK 29 million in investments PA RESOURCES ANNUAL REPORT 2012 25

Board of Directors Report The Group s business activities The Group s business activities Demand for oil Oil prices remained high in 2012. The price of Brent crude reached an historic average high over the year of USD 112 (111) per barrel with a peak of about USD 128 per barrel in March and a temporary low of about USD 89 per barrel in June. According to the International Energy Agency (IEA), global demand was 89.7 million barrels per day (88.9) in 2012, up 0.9% year-on-year. The IEA estimates demand in 2013 to be about 90.5 million barrels per day, this estimate is based on demand increasing in the growth economies and continuing to decline in OECD countries. The major risks for supply in 2013 are assessed as geopolitical tensions in Iran and Nigeria, which can negatively impact production. For more information, see the Market chapter on page 18. Production and sales Production In 2012, oil was produced from six fields of which four were located in Tunisia where the Didon field is the largest - the Azurite field in the Republic of Congo and the Aseng field in Equatorial Guinea. PA Resources produced a total of 2.9 million barrels of crude oil (3.1) in 2012 based on working interest, which is PA Resources share of total gross production before taxes and royalties. Average production over the year was 7,900 barrels per day (8,600). At the end of the year, average production amounted to 7,100 barrels per day. Sales and customers In total, 2.4 million barrels of oil (2.3) were sold at an average price of USD 111 per barrel (103) in 2012. The Group s crude oil was sold primarily in the world market to a few major international oil trading companies. The price of oil is set according to pricing formulas that relate the individual oil field s quality to the quality of Brent. In Tunisia, about 20 percent was sold to the local market in 2012 with discounts pursuant to the licence terms. For more information, see Note 6 on page 56. Royalties The licence agreements for the Republic of Congo, Tunisia and Equatorial Guinea involve royalties, which are paid to the state in oil or as a monetary royalty. In 2012, PA Resources royalty costs amounted to SEK 255 million (277). For more information, see Note 2.1 on page 50 and Note 5 on page 54. Oil inventory The oil inventory, including royalties and other taxes, amounted to 255,596 barrels (302,961) on 31 December 2012. The oil inventory outstanding on the balance sheet date is reported as if the oil inventory is sold. For more information, see Note 2.1 on page 50. Changes in ownership in 2012 PA Resources made no acquisitions or divestments of companies or shares in companies in 2012, nor formed any new companies. During the year, PA Resources was provisionally awarded a 50-percent working interest in Block 22/19a in the UK and will be licence operator. The Group relinquished the licences: 9/95 ( Maja ) in Denmark, Marine XIV in the Republic of Congo (Brazzaville) and P1342 in the UK. In mid-january 2013, licence P1802 was relinquished, for which impairment was recognised in the fourth quarter of 2012. Furthermore, PA Resources decreased its working interest in licence B20008/73 offshore Germany by farming out 10 percent to Danoil Exploration A/S. Employees At the end of the year, the PA Resources Group had a total of 124 (133) employees. Of these, 99 (109) were men and 25 (24) women. The average number of employees was 132 (133). PA Resources has offices in London, Stockholm and Tunis, and a representative office in Brazzaville. The majority of personnel are stationed in Tunisia at the regional office and at production facilities. In addition, contractors and consultants are engaged for preparation for and performance of drilling campaigns and development projects. Remuneration of senior executives Remuneration of the President and other senior executives com prises fixed salary, variable remuneration, other benefits and pensions as detailed in Note 8 on page 58. The guidelines for remuneration of the Group s senior executives were adopted by the 2012 Annual General Meeting and are presented in the Corporate governance report on page 32. The environment All oil-related operations impact the environment and entail risk. The Group complies with the environmental legislation and regulations applicable in each country. Typical areas regulated include air pollution, water use, discharges to watercourses, handling of hazardous substances and waste, land and groundwater contamination, and restoration of the environment around the facilities after operations have ceased. In Sweden, the group has no operations that require notification or permits under the Environmental Code. PA Resources strives to minimise the environmental impact and avoid the occurrence of accidents. Therefore, the Group strives to produce the oil as efficiently as possible, to continuously improve working methods and to select equipment that enables a reduction in environmental impact. Efforts primarily focus on measures within the following areas: Atmospheric emissions Emissions to land and water Handling of produced water Energy consumption Waste management In 2012, the Group developed further the environmental ratios that PA Resources started to measure and monitor in 2010. PA Resources works with preventative measures to minimise the risk of accidents occurring that could impact the environment or people and crisis management plans have been implemented that are to be followed. For more information, see the chapter on Sustainability. Disputes At the time of publication of the Annual Report, PA Resources was not involved in any significant disputes with other parties. Shares and ownership PA Resources AB s share has been listed on the NASDAQ OMX in Stockholm since 2006. The share moved to the Small Cap segment in January 2013. For more information, see Note 22 on page 65 and the PA Resources share section on page 22. Pursuant to the valid Articles of Association for PA Resources, as adopted at the Extraordinary General Meeting on 7 December 2012, the share capital must be a minimum of SEK 400 million and a maximum of SEK 1,600 26 PA RESOURCES ANNUAL REPORT 2012

Board of Directors Report The Group s business activities Sales price per quarter (USD per barrel) 140 120 100 80 Average production per region (barrels per day) 1,200 1,000 800 600 Number of employees per 31 December 2012 Parent company Stockholm, Sweden 8 (9) 60 40 20 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2011 2011 2011 2012 2012 2012 2012 PA Resources Brent 400 200 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2011 2011 2011 2012 2012 2012 2012 West Africa North Africa Region North Africa Tunis, Tunisia 105 (112) Region West Africa + Region North Sea & Greenland London, United Kingdom 11 (11) million allocated between a minimum of 4,000 million shares and a maximum of 16,000 million shares. In October 2012, 759 new shares were issued when convertibles were converted to shares. As per 31 December 2012, PA Resources had carried out the first transaction the set-off issue within the framework of the proposed recapitalisation that was approved by the Extraordinary General Meeting on 7 December 2012. The set-off issue increased the number of shares by 6,455,770,272 and, at year-end, the total number of shares outstanding was 7,093,247,924 (637,476,893) and the share capital was SEK 709,324,792.40 (318,738,446.50). The quota value per share was changed at the Extraordinary General Meeting on 7 December from SEK 0.50 to SEK 0.10 per share. A temporary B-share was introduced during the issue processes which resulted in two classes of shares. One A-share corresponded to one vote and one B-share corresponded to half a vote. The B-share was only introduced for the administrative management of the issue processes and was never eligible for trading. In early February 2013, the subsequent fully underwritten rights issue was completed, which increased the number of shares by 7,052,751,048. Following this, all B-shares were automatically converted to A-shares and became eligible for trading on the NASDAQ OMX in Stockholm from 7 February 2013. Thereafter, the total number of shares outstanding was 14,145,998,972 and the share capital was SEK 1,414,599,897.20. All shares outstanding are class A-shares with equal voting rights of one vote per share. On 31 December 2012, PA Resources had no owners with more than 10 percent of the shares in the company. PA Resources AB had no holding in its own shares. There are no rules in PA Resources Articles of Association or supplements thereto relating to the appointment or removal of Board members at a general meeting. Regarding severance pay in the event of significant changes in ownership, see Note 8 on page 58. Future prospects PA Resources production is generated primarily by the three fields Aseng, Azurite and Didon. The Aseng field started production in November 2011 and, in 2012, the field reached a plateau production level of 60,000 barrels per day as compared with the initial plan for 50,000 barrels. The field is expected to generate significant cash flow in future years. In addition, more discoveries in the proximity will be developed and linked to existing infrastructure. The Alen field is the next of these fields and is expected to start production in the third quarter of 2013. The increase in production from Alen will only be modest for PA Resources but the synergies from the shared infrastructure are expected to reduce costs per barrel produced. While PA Resources total production gradually declined over the year, cash flow from operations increased. The continued high oil price and the profitable production from Aseng since the field s investments were already repaid in the second quarter of 2012 were particularly favourable. The price of Brent crude reached an historic average high of USD 112 per barrel in 2012. Production levels at the Azurite field and the Didon field are difficult to estimate since both fields have entered a phase of decline. PA Resources has decided not to make any production forecasts for 2013 and will continue to publish monthly production reports. The strengthened balance sheet at the start of 2013 enhances the company s scope to conduct asset transactions and continue financing activities. As part of achieving long-term production growth with a stable cash flow, PA Resources will develop a number of prioritised assets, in total about 32 million barrels. These investments will be performed with a lower working interest to minimise exposure in each individual project. In addition, the company will invest actively but selectively in exploration and, of course in the operational expenditures necessary to continue oil production operations. PA Resources has only a few fixed commitments for 2013 and 2014. The company s financial performance is principally impacted by trends in oil prices and production levels; it is also affected by exchange rates, interest rates as well as costs for purchasing and rental of services and equipment. Significant events in 2013 PA Resources rights issue of SEK 705 million was completed at the end of January, for more information, see Note 34 on page 75 In February, PA Resources appointed Tomas Hedström as its new CFO and a member of Group Management. He will take up his duties as CFO by 1 August 2013 at the latest PA RESOURCES ANNUAL REPORT 2012 27

Board of Directors Report Financial summary Financial summary Group revenue and profit (SEK million) 2012 2011 Change analysis Revenue 2,184 2,154 Revenue increased slightly compared with 2011, primarily due to a higher sales price and exchange differences arising from a stronger USD. The increase was offset by lower production. EBITDA 1,255 1,295 EBITDA decreased slightly compared with 2011, primarily due to increased production costs, which are predominantly fixed and totalled SEK 495 million (431) for the period. The increase was principally attributable to the addition of the Aseng field in region West Africa, which was brought into production in the fourth quarter of 2011. EBITDA also declined due to increased external expenses, which were SEK 111 million (85). The decline in EBITDA was offset by increased revenue primarily due to a higher sales price and reduced royalties, amounting to SEK 255 million (277) as a consequence of lower production. Operating profit 684* (-1,064) Profit before tax 85* (-1,663) 508* (-1,527) 158* (-1,877) Operating profit amounted to SEK 684 million (508) excluding one-off costs. Depreciation and amortisation amounted to SEK 571 million (787) and declined due to lower production at the Azurite field and in region North Africa. In addition, the impairment of the Azurite field in the third quarter of 2012 reduced depreciation and amortisation. Operating profit was impacted by significant one-off costs of SEK 1,748 million (2,035) attributable to impairment of the book value of the Azurite field and the MPS licence in the Republic of Congo in an amount of SEK 1,315 million due to a revision of the volume of recoverable reserves. The relinquishment of the licences, Marine XIV in the Republic of Congo, 9/95 ( Maja ) in Denmark and P 1342 and P 1802 in the UK resulted in a total impairment loss of SEK 281 million. Furthermore, additional costs for investment in the Azurite field of SEK 151 million were expensed since the entire field s remaining value was impaired in the third quarter of 2012. Profit before tax was impacted by the Group s net financial items which amounted to SEK 599 million ( 350) for the full year. Net financial items were negatively impacted by one non-cash item amounting to SEK 70 million attributable to the reclassification/extinguishing of the convertible bond in conjunction with the set-off issue carried out. Net financial items for the period were negatively impacted by a decline in capitalised borrowing costs in conjunction with the completion of the Aseng field in Equatorial Guinea. Profit for the year -218* (-1,966) -326* (-2,084) The profit for the year was impacted by reported tax that during the year amounted to SEK 303 million ( 207). The reported tax charge was negatively affected by approximately SEK 75 million as a result of a new assessment of the right to make deductions in Equatorial Guinea for operational and financial expenses. Paid tax was SEK 5 million (45). * Excluding non-cash, one-off costs. Investments The major portion of investments in 2012 was attributable to the investments in the planned sidetrack on the Azurite field and, a minor portion, attributable to the development investments in the Aseng and Alen fields. Investments totalled SEK 255 million (1,613) during the year. SEK 48 million (573) was invested in exploration and evaluation assets, of which SEK 29 million (346) comprised investments in the North Sea region. Investments in oil and gas properties amounted to SEK 207 million (1,032), of which SEK 207 million (607) was attributable to West Africa and SEK 0 million (425) to North Africa. Investment in machinery and equipment totalled SEK 0 million (7). For the full-year 2013, the pace of investment is expected to amount to SEK 250-380 million and this forecast does not presuppose any reduction in working interests in prioritised assets. Capital structure The objective for the Group s capital structure is to create a balance between equity and loan financing, to ensure financing of the business at a reasonable cost. As far as possible, the Group endeavours to finance growth and ongoing investments from its own cash flow. The operations are capital-intensive and cash flow has historically been supplemented with bond and bank loan financing and through the issue of new shares and convertibles. Financing activities in 2012 Convertible bond and bond loan As part of the proposed recapitalisation plan presented in November 2012, holders of the convertible bond were offered to set-off their holdings of convertible bonds against a new issue of B-shares at a subscription price of SEK 0.15 per new B-share at the end of December. 90 percent of the convertible bond holders accepted the offer, which meant that the nominal amount outstanding decreased by SEK 890.5 million. The remaining convertible bonds mature in January 2014 with a nominal amount of SEK 93.7 million. For more information, see Note 34 on page 75. During the year, the amount outstanding, USD 6.2 million, was redeemed of a bond loan with an original nominal value of USD 100.0 million. Credit facilities and other interest-bearing loans and borrowings At the end of the year, credit facilities and other interest-bearing loans and borrowings totalled SEK 727 million (1,299), of which SEK 414 million (814) was recognised as short-term interest-bearing loans and borrowings. For more information, see Note 23 on page 67. Amortisation During the year, PA Resources paid down a net total of SEK 568 million (408) in interest-bearing liabilities. The Group s total interestbearing liabilities, of which approximately half are unsecured bond loans, amounted to SEK 2,688 million (4,027) as per 31 December 2012. For more information, see Note 23 on page 67. The maturity structure below illustrates loans outstanding at the end of December 2012 and presupposes that the company is no longer in breach of any loan covenants following completion of the recapitalisation. Maturity structure of bonds and convertibles (SEK million) 1,200 1,000 800 600 400 200 0 2013 2014 2015 2016 Bond (SEK 850 million) Convertible bond Bond (NOK 900 million) 28 PA RESOURCES ANNUAL REPORT 2012

Board of Directors Report Financial summary Group liquidity and financial position 2012 2011 Change analysis Cash flow from operations (SEK million) Net cash flow after financing and capital expenditure (SEK million) Cash and cash equivalents at year-end (SEK million) Total interest-bearing liabilities including convertibles (SEK million) Equity at year-end (SEK million) 838 812 Cash flow from operations improved compared with the preceding year and was positively affected by a higher average sales price, partly offset by lower production. Cost of sales reduced cash flow from operations primarily due to increased costs for the Aseng field, which was brought into production in the fourth quarter of 2011. 15-1,209 Total investments amounted to SEK 255 million (1,613) and, in 2012, were predominantly attributable to the sidetrack at the Azurite field as well as smaller development investments at the Aseng and Alen fields. Cash flow from financing activities was affected by amortisation of interest-bearing liabilities in a net amount of SEK 568 million, which should be compared with the preceding year s net amortisation of SEK 408 million. 58 44 Cash and cash equivalents amounted to SEK 58 million (44) at year-end. After the completion of the rights issue, cash and cash equivalents amounted to about SEK 570 million. For more information, see Note 34. 2,688 4,027 Total interest-bearing liabilities, long-term and short-term, decreased during the year, Primarily due to the completed set-off issue. As a consequence of the above, the convertible bond decreased by SEK 819 million, corresponding to a nominal debt reduction of SEK 890 million. In addition to the set-off issue, net amortisation of interest-bearing liabilities totalled SEK 568 million (408). 1,590 2,816 Equity decreased primarily due to the period s negative result for the year of SEK 1,966 million and exchange differences of SEK 229 million. The set-off issue completed at the end of the year positively impacted equity with SEK 968 million. The equity/assets ratio amounted to 25% (32%) at year-end. Debt/Equity ratio (%) 165 141 The debt/equity ratio increased during the year despite a decrease in interest-bearing liabilities. This was primarily attributable to a reduction in adjusted equity subsequent to significant one-off costs in 2012. Financial control and goals Liquidity is monitored and planned on an ongoing basis to meet expected payment flows. Bank relations and borrowing needs as well as currency and liquidity management are coordinated by the Group s central Treasury function. The liquidity risk is balanced through planning the maturity structure of the Group s outstanding financial liabilities. Ultimately, the Board of Directors monitors the Group s cap ital structure and financial management, approves issues concerning acquisitions, investments, borrowing and monitors the exposure to financial risk on an ongoing basis. To a greater extent, continued investment will be financed by operating cash flow and the objective is to continue the reduction in the company s debt and interest expense. Financial covenants All PA Resources bond loans contain financial covenants. These apply to the level of book equity and the possibility of paying a dividend and the buy-back of the company s shares. In 2012, PA Resources was in breach of certain covenants in the bond agreement but was granted waivers by the bondholders until the recapitalisation plan was completed. For more information, see Note 23 on page 66. Reporting of financial instruments Neither PA Resources AB nor its subsidiaries carry out hedge accounting for reporting purposes but may elect to implement various hedging measures in respect of interest-bearing liabilities. Occasionally, PA Resources uses currency and interest rate swap contracts to match the currency and interest rate exposure of the Group s bond loans. Currency swap contracts are used to hedge loans in local currencies against the USD. Interest rate swap contracts, for which the interest rate can be changed from variable to fixed, and vice versa, are utilised to manage interest rate exposure. The Group had no currency or interest rate swap contracts outstanding as per 31 December 2012. In addition, PA Resources may, from time to time, choose to hedge the oil price for a portion of its production through the purchase of put options, which provide the Group with a right, but not an obligation, to sell a volume of oil at a predetermined price during a predetermined period. The Group held no put options at 31 December 2012. Parent Company s profit/loss and financial position The Parent Company s revenue amounted to SEK 28 million (26) in 2012 and was primarily attributable to sales of services to other Group companies. Net financial items amounted to SEK -803 million (-1,451) and was negatively affected by the impairment of intra- Group receivables in an amount of SEK 1,799 million as a result of the impairment of working interests in the Republic of Congo and SEK 132 million as a result of the relinquishment of the licences: Marine XIV in the Republic of Congo and 9/95 (Maja) in Denmark. Net financial items were favourably impacted by dividends of SEK 1,895 million from subsidiaries. The Parent Company s net financial items were impacted by exchange differences. Equity amounted to SEK 2,676 million at year-end, as compared with SEK 2,399 million at the end of 2011. The increase was mainly attributable to the set-off issue, totalling SEK 968 million, and dividends received from subsidiaries, offset by intra-group impairment charges. Deferred tax assets at year-end amounted to SEK 103 million (0) with the increase attributable to the restructuring of the Group s internal loan structure. Adjusted opening balance and changes in accounting During the year, PA Resources adjusted the opening balance for 2011, which impacted equity by SEK -444,738 thousand and changed its presentation of non-current assets in the balance sheet and in the segment reporting. For more information, see Note 2.1 on page 49. For a brief guide to significant items that impact PA Resources profit and accounting, see page 78. PA RESOURCES ANNUAL REPORT 2012 29

Board of Directors Report risks and risk management Significant risks and risk management Operational risks Description of risks PA Resources risk management Outcome 2012 Varying production levels P Financial impact if the risk occurs P PA Resources produces at a limited number of fields. This means that natural decline in production and production disruptions at individual wells or facilities can have a negative impact on total production levels and revenue. In conjunction with work on producing oil fields, production levels may be subject temporarily to negative impact. PA Resources works with exploration and development of new oil fields to maintain production levels and cash flow. A long-term objective is to develop more fields into producing fields. Improvements are implemented at existing production facilities to optimise production. Production at the Aseng field in Equatorial Guinea gradually increased until the optimal production level was reached. At the start of the year, the Azurite field in the Republic of Congo was hit by technical problems in one of the producing wells resulting in reduced production. After analysis, a decision was taken to drill a new sidetrack which was stopped by a technical fault. The Azurite field produced significantly below planned levels. Production was stable in Tunisia with the exception of temporary closures of the small onshore fields due to social unrest in the region. Read more on page 16. High Decline in reserves P PA Resources reserves and production will decrease over time as the existing reserves are utilized unless new reserves are added through exploration, acquisition or development. PA Resources carries on exploration activities in existing licences and develops discoveries for production. The objective is to have a balanced asset portfolio with licences spread across the stages of exploration, appraisal, development and production. At year-end, proven and probable (2P) reserves based on working interest amounted to 55.7 million barrels oil equivalents (60.2), of which 38.1 million barrels (39.1) were 1P reserves. Read more on page 14. High Fluctuations in the price of oil and gas P The world market price of oil and gas fluctuates from day to day and is influenced by a wealth of factors outside of PA Resources control, including the global economic trend, government and central bank measures, geopolitical unrest, weather, availability of oil, investment costs and access to alternative energy sources. In the long term, demand for oil and gas can also be influenced by the climate debate and the endeavour to reduce carbon emissions to the atmosphere. Major price fluctuations are negative since lower revenues and increased uncertainty impact the size of investments. When required, PA Resources hedges the oil price of future sales. The investment budget and plans are continuously reviewed and costings revised based on the prevailing market situation. Deferment of certain investments, primarily in those fields where the Group is operator or major owner, is common in periods of low oil prices. The price of Brent crude reached an historic average high of USD 112 per barrel in 2012. PA Resources average sales price tracked Brent crude over the year and was USD 111 per barrel. Despite slow economic growth, the oil price remained high for reasons including geopolitical unrest, particularly in North Africa and the Middle East. Read more on page 18. High Natural disasters P PA Resources existing or future production facilities may be impacted by natural disasters. Should such an event occur, existing oil production may be negatively affected or even cease. Natural disasters can have a devastating effect on the activities of the company, wiping out large values. In addition, natural disasters can mean a stop in production with accompanying major costs for restoring production as well as a period with no or partial sales revenue. In the case of a natural disaster, risks exist that PA Resources would not have sufficient financial resources to immediately, or at all, make the requisite investments for restoring production. The Group holds property and liability insurances in line with international standards, but is not fully insured against all types of risks. There is an additional risk that the Group cannot obtain full compensation from insurance in the event of a natural disaster. In 2012, PA Resources did not suffer the effects of any natural disaster. High Accidents, damage and delays P The Group may also suffer accidents and damage to facilities, environmental damage or personal injuries. For example, fires, explosions, blowouts, accidental leaks and shipping accidents can occur. Delays can arise due to bad weather, poorly performed work by external partners, changes in government requirements and delayed deliveries of equipment. Efforts are actively pursued in the areas of health, the environment and safety to minimise the risk of accidents, injuries and delays. Safety and risk assessments are performed and measures taken ahead of drilling, seismic surveys and the development of fields. The Group has property and liability insurances in line with international standards, but the Group is not fully insured against all types of risks. The Group monitors accident and incident statistics. No significant accidents occured in 2012. At the start of the year, technical problems occurred in a producing well on the Azurite field, which decreased production. The field s 2P reserves were reduced by 2.9 million barrels. Low High Geological risks P All estimations of oil and gas reserves and resources involve a certain degree of uncertainty. The risk exists that the estimated volumes will not accord with reality. The probability of discoveries of oil or gas varies. If a well proves to be dry, there will be no return on the investment. Even if an oil discovery is made, the qualities of the bedrock may prevent production. PA Resources estimates of reserves are performed pursuant to well-established rules and standards. The Group strives to employ staff with a high level of geological expertise in order to minimise the risk of inaccurate estimates. When estimating reserves and resources the probability of the volumes existing in reality is also assessed. Also considered is the fact that, in statistical terms, a certain proportion of the wells drilled will be dry. The reserves and resources are classified differently depending on this probability, which provides a measurement of the geological risk. PA Resources exposure to this risk is comparable with that of other oil companies. Medium Competition P The petroleum industry is highly exposed to competition at every level. This applies to the acquisition of working interests in oil and gas licences, the sale of oil and gas, the availability of the necessary drilling equipment and other consumables as well as access to qualified and skilled personnel in those areas where activities are conducted or will be conducted. PA Resources competes with many oil companies with substantially larger resources, more staff and larger facilities than the Group and its partners. PA Resources works actively with the optimal development of its own assets and with the identification and acquisition of suitable producing assets or discoveries for exploration. The Group must also meet financial and competition-related factors that impact the distribution and sale of oil and gas in a cost-efficient manner. The availability of rigs approved for drilling in Denmark was extremely limited during the year. PA Resources continued appraisal and exploration on licence 12/06 was delayed as no rig could be contracted. Low High 30 PA RESOURCES ANNUAL REPORT 2012

Board of Directors Report risks and risk management Read more about risks at www.paresources.se Cont. Operational risks Description of risks PA Resources risk management Outcome 2012 Other operational risks In the course of its activities, PA Resources meets a number of other operational risks, including disputes regarding agreements, revocation of licences and increased costs for handling or dismantling facilities. Other risk factors that are presently unknown or which are not deemed significant at present may impact the Group s operations, earnings or financial position. PA Resources complies with the applicable laws and regulations of those countries in which it operates and with the agreements the company has made. However, the possibility of an agreement becoming the subject of differing interpretation and disputes under the applicable legislation cannot be ruled out. The Group is responsible for the dismantling and asset retirement costs for those fields to be abandoned and closed down. These costs can increase due to new legislation or the cleaning up of an unforeseen environmental impact. In 2012, no licences were revoked. No significant disputes are ongoing between PA Resources and any other parties at the time of publication of the Annual Report. No field has been closed during the year and, accordingly, the company has incurred no costs for environmental restoration in 2012. Low High Financial risks Description of risks PA Resources risk management Outcome 2012 Refinancing risk P PA Resources is in need of refinancing for the maintenance, development and exploration of the Group s licences and discoveries. In addition, the Group needs a liquidity reserve for the management of current payment obligations in operating activities, planned investments and amortisations. Refinancing risk is defined as the risk that financing or refinancing is troublesome or costly to secure. After completion of the recapitalisation in February 2013 and the improved financial position this provided, PA Resources is reviewing its various refinancing alternatives with the objective, in line with the business plan presented, of maintaining the level of net borrowings and lowering interest expenses. In 2012, holders of the convertible bond were offered to convert their holdings to shares in parallel with a rights issue. Read more on page 8 and in Note 34. Medium High Liquidity risk P PA Resources business activities are capital intensive. Exploration and development of fields requires access to financing as a supplement to cash flow from operations. The ability to make investments may be impaired if the cash flow were to be insufficient or external sources of capital limited. If the Group is unable to meet its amortisation or interest payments when they fall due and unable to renegotiate or refinance the loans there is a risk of a new issue of shares. If a new issue of shares cannot be performed the company could become subject to a reconstruction process or be placed into receivership. Continuous work is performed on raising capital and refinancing through, for example bond loans and other types of facilities. The objective is to create a balance between equity and loan financing so that financing of operations is secured at a reasonable capital cost. On the balance sheet date, cash and cash equiva lents amounted to SEK 57.6 million (44.5). Read more in Note 33. In early January, a fully underwritten rights issue was completed which raised SEK 705 million for the company before issuing costs. Read more in Note 34. Medium High Other financial risks Through its operations, PA Resources is exposed to the majority of financial risks, including interest risk, credit risk and currency risk as well as transaction risk and translation risk. Read more in Note 33. Interest risk is managed through measures including interest swaps while currency risk is managed through natural hedging of flows through raising loans in foreign currencies. Credit risk is managed through checking the creditworthiness of all customers that wish to do business on credit. Read more in Note 33. The average fixed-interest period was 1.5 years (2.0) at year-end. A concurrent shift in the interest-rate curve of one percentage point for all the Group s loans would have an impact on net financial items of ± SEK 0.0 million (2.5). A concurrent 10-percent change in each currency against the SEK would have a +/- effect on the Group s operating profit of SEK 17.7 million (37.9). Read more in Note 33. Low High Political risks and risks related to society Description of risks PA Resources risk management Outcome 2012 Political and economic instability and corruption P PA Resources conducts business activities in countries where corruption exists and a substantial level of risk exists in respect of political instability. The concept, political instability, comprises financial vulnerability and vulnerability to unrest. Unrest, political and economic instability in society, can hinder the company from conducting business, cause production interruptions, delays and pose a threat to security among other items. PA Resources avoids establishing operations in new countries where the level of instability is deemed too high and has zero tolerance for bribes and facilitation payments. If instability or unrest arises in those countries where the Group is already established, the risks are evaluated to facilitate management of the situation. For guidance on the management of difficult situations, the Group uses the OECD Risk Awareness Tool for Multinational Enterprises in Weak Governance Zones among other tools. Read more on www.sweden.gov.se. Political risk Security risk Equatorial Guinea High Medium The Republic of Congo Medium Medium Tunisia Medium Low The UK Low Low Germany Low Low The Netherlands Low Low Denmark No risk No risk Sweden No risk No risk Source: Control Risk Medium High Negative changes in fiscal terms P PA Resources operations are affected by the applicable tax rules of each country in which the Group operates. Each country controls and decides the tax to be paid by the oil industry. Tax often comprises various combinations of royalties, discounts on oil produced, income tax, investment subsidies, stamp duty and capital gains tax. Oil producing developing countries have had a tendency to raise these taxes in pace with rises in oil prices, which can negatively impact earnings and cash flow. PA Resources strives to maintain a healthy ongoing dialogue regarding taxes with government agencies in those countries where the company has operations. In 2012, no fiscal terms were changed in the oil-producing countries but some fiscal improvements were made in the UK. Low High PA RESOURCES ANNUAL REPORT 2012 31

Board of Directors Report Corporate governance report Corporate governance report 2012 PA Resources views solid corporate governance and sound risk management as core elements for sustainable and profitable operations. The role of corporate governance is to create favourable conditions for active and responsible ownership as well as a clear structure allocation of responsibility between the Board of Directors and the company management. In parallel, corporate governance is aimed at maintaining confidence among investors, capital markets, partners, customers, employees and other stakeholders. Corporate governance is not only about efficient procedures and controls; it also presupposes a highly ethical basic outlook that pervades the entire organisation. Governance of PA Resources Nomination Committee Remuneration Committee North Africa Region General Meeting Board of Directors President and Group Management Group Management Team West Africa Region External Auditors Audit Committee North Sea Region Key events in 2012 In the autumn, PA Resources was in a critical financial position and on 7 November 2012, the Board submitted a proposal aimed at reducing the overly high level of debt and, at the same time, increasing the company s equity while adding liquid funds. The proposal was approved by a resolution at the Extraordinary General Meeting on 7 December 2012 and, at the end of December 2012, a set-off issue for the holders of the company s convertible bonds was performed and followed by a fully underwritten rights issue that raised SEK 705 million in new capital for the company before issuing costs in January 2013. These transactions resulted in a significant strengthening of the financial position and enhanced prerequisites for PA Resources continued operations. General Meeting The shareholders meeting is the highest decisionmaking body of PA Resources, where all shareholders are entitled to attend, to raise a matter for discussion and to exercise their voting rights for all their shares. The Board of Directors is elected at the company s Annual General Meeting (AGM). In addition, the AGM adopts the company s and the Group s income statements and balance sheets as well as elects the company s external auditors. In addition, the AGM passes resolutions regarding Board fees and adopts guidelines governing the remuneration of senior executives. The Nomination Committee The Nomination Committee represents the shareholders of the company and is tasked solely with preparing recommendations on election and remuneration issues for decision at the Annual General Meeting (AGM) as well as, in certain cases, proposing procedural questions ahead of the next Nomination Committee. The Nomination Committee is appointed each year for PA Resources in line with the resolution passed at the AGM. The Nomination Committee comprises the Chairman of the Board together with representatives of the three largest shareholders in the company at the end of the third quarter, who have elected to be represented on the Nomination Committee. In accordance with the resolution of the AGM, items including changes in ownership must be taken into consideration when appointing representatives for the Nomination Committee. External auditors The company s auditing firm is Ernst & Young AB and the auditor in charge is Authorised Public Accountant Björn Ohlsson. Ernst & Young, who were appointed the company s auditors at the 2009 AGM for the period until the 2013 AGM, conduct audits of all significant companies in the Group. In conjunction with the company s year-end financial statement, the auditor examines the company s annual accounts, consolidated financial statements and accounting as well as whether the administration of the Board of Directors and President was performed in compliance with accepted auditing standards in Sweden. The auditor performs a review of the interim report for the first six months. The auditor works according to an established audit plan and reports observations to the Audit Committee on an ongoing basis over the year. Furthermore, the auditor provides an audit report and participates in the AGM. The Board of Directors The Board has overriding responsibility for managing the affairs of the company in the best possible manner on behalf of the shareholders. The Board s work follows an annually established formal work plan. The Board supervises the President s work by performing an ongoing follow-up of business activities. Furthermore, the Board monitors that the company s organisation, management and guidelines are appropriately structured and that internal control is adequate. The Board sets strategies and goals, takes decisions on major investments, acquisitions and divestments of operations and assets. The Board also appoints the company s President and sets the salary and other remuneration of the President and other senior executives. Pursuant to the Articles of Association, the Board of PA Resources must consist of a minimum of three and maximum of eight members with a maximum of eight deputy members. The Chairman directs the work of the Board and is responsible for it being well-organised and efficiently performed. This includes ongoing monitoring of the company s operations through dialogue with the President and responsibility for ensuring other Board members receive information and supporting documentation 32 PA RESOURCES ANNUAL REPORT 2012

Board of Directors Report Corporate governance report that ensures discussion of high quality with adequate supporting documentation for Board decisions. The Chairman leads the evaluation of the Board s and the President s work and represents the company in ownership issues. Remuneration Committee The Remuneration Committee prepares decisions for the Board in matters relating to remuneration guidelines and other terms of employment for the company s senior executives. The Committee monitors and evaluates programs for variable remuneration, the application of resolutions passed by general meetings on guidelines for remuneration of senior executives and the structures and levels for remuneration applicable within the Group. The Remuneration Committee prepares proposals for decision and recommends that the Board approve the proposed decisions. Audit Committee The Audit Committee monitors financial reporting, the efficiency of the company s internal control, internal audit and risk man agement. The Committee ensures it stays informed regarding the audit, examines and monitors the impartiality and independence of the auditor as well as assists the Nomination Committee with proposals for the election of auditors at the AGM. The Audit Committee prepares proposals for decision and recommends that the Board approves the proposed decisions. President, Group management and the Group Management Team PA Resources President and CEO is responsible for leading and developing the ongoing activities of the company in line with the Board s guidelines and instructions. The Board s formal work plan and the Board s special instructions for the President detail, among other items, the division of work between the Board and the President. In consultation with the Chairman, the President prepares documentation and supporting data for the Board s work. The CFO provides the President with support and together with the President comprises the company s Group management. PA Resources also has a Group Management Team (GMT), which is comprised of the Group management and the respective managing directors of region North Africa and region West Africa and North Sea. When required, other key personnel are included from project management, investment and communication. The PA Resources Group has a decentralised organisational structure in which the respective regions have responsibility for the development of their respective activities through established goals, strategies and budgets. The regions are responsible for their operating income, capital and cash flow which are followed up on a monthly basis at the business review meetings. Operational activities are followed up by the Group management on a daily basis and weekly GMT meetings are held by telephone. Key external rules and regulations The Swedish Companies Act NASDAQ OMX Stockholm s rules and regulations Swedish Corporate Governance Code (the Code) Accounting standards Key internal rules and regulations Articles of Association The Board s formal work plan and the Board s special instructions for the President including instructions pertaining to financial reporting to the Board and instructions for committees Guidelines for remuneration of senior executives Policy documents (for example, finance, communication, HR and environment) and instructions (such as, authorisation and payments) Work during 2012 Annual General Meeting 2012 The Annual General Meeting was held on 22 May 2012 in Stockholm. 78 shareholders attended the meeting, either in person or through a proxy, which corresponded to about 6.79 percent of the shares and votes in the company. The Chairman of the Board, Hans Kristian Rød, was elected Chairman of the meeting. The Annual General Meeting resolved: to adopt the income statements and balance sheets for the Parent Company and the Group as well as grant the members of the Board and the President a discharge from liability for their administration not to pay any dividend to the shareholders to re-elect Hans Kristian Rød, Catharina Nystedt-Ringborg, Lars Olof Nilsson, Paul Waern and Per Jakobsson, as well as, to re-elect Hans Kristian Rød as Chairman of the Board to adopt the principles for appointment of the Nomination Committee prior to next year s AGM, which will comprise the Chairman of the Board and representatives of the three largest shareholders of the company at the end of the third quarter in 2012 who have elected to be represented on the Nomination Committee to approve that a board fee of a total of SEK 1,650,000 would be paid, of which SEK 550,000 of the fee would be allocated to the Chairman and SEK 275,000 to each of the other members of the Board In 2012, PA Resources deviated from the Code on one point Deviation from 2.4 Publication of the names of members of the Nomination Committee not less than six months prior to the AGM, that is, not later than 14 November 2012. Explanation Those issues performed at the end of 2012 and the beginning of 2013 entailed major changes in ownership that were assessed as necessary to take into account prior to the appointment of the Nomination Committee for the 2013 AGM. This resulted in the publication of the Nomination Committee being deferred until the issues were completed and the new ownership structure known. Against this background, the Nomination Committee ahead of the 2013 AGM was appointed based on the ownership structure on 8 February 2013 and, accordingly, publication of the composition of the Nomination Committee was not possible until 27 February 2013, corresponding to two and a half months prior to the 2013 AGM. to re-elect Ernst & Young AB as the company s auditors with Björn Ohlsson as auditor in charge to adopt the guidelines for remuneration of the President and other senior executives as proposed by the Board of Directors. Extraordinary General Meeting on 7 December 2012 The Extraordinary General Meeting was held on 7 December 2012 in Stockholm to pass resolutions on the items pertaining to the new issues performed at the end of 2012. 61 shareholders attended the meeting, either in person or through a proxy, which corresponded to about 3.4 percent of the shares and votes in the company. Lawyer Klaes Edhall was elected Chairman of the meeting. Resolutions passed at the Extraordinary General Meeting included: the adoption of new articles of association pursuant to which the limits for share capital and number of shares are altered and a new class of share, B shares, is introduced for a temporary period, for administrative purposes pertaining to the new issues the reduction of share capital through changing the share s quota value the approval of the Board s decision to perform a set-off issue directed at holders of the company s convertible bond 2008/2014 the authorisation of the Board to resolve upon the subsequent rights issue. PA RESOURCES ANNUAL REPORT 2012 33

Board of Directors Report Corporate governance report Annual General Meeting 2013 The 2013 Annual General Meeting of PA Resources AB will be held on14 May at Polstjärnan in Stockholm. Shareholders who would like to raise an item to be addressed at the AGM can submit a written proposal to the board in good time prior to the AGM. For more information about the AGM see page 80 or www.paresources.se/en/corporate_governance The Nomination Committee s work The Annual General Meeting 2012 resolved that the Nomination Committee prior to the Annual General Meeting 2013 is to be comprised of the Chairman of the Board and representatives of the company s three largest directly registered shareholders as at 30 September 2012, according to Euroclear Sweden s share register as of the same date, who have elected to be represented on the Nomination Committee. In the event that such a shareholder does not appoint a representative of the Nomination Committee or if the shareholder sells a significant portion of its shares prior to the constitution of the Nomination Committee, the fourth-largest registered shareholder is asked, and so on. In addition, significant changes in the ownership structure must be reflected in the composition of the Nomination Committee. Since the two share issues in December 2012 and January 2013 resulted in major changes in the ownership structure, the Nomination Committee ahead of the 2013 AGM was not appointed until after these issues had been completed and was appointed based on the ownership structure on 8 February 2013. Of the three owner representatives, Sven A. Olsson was appointed Chairman of the Nomination Committee. So far, the Nomination Committee has met on one occation. The Chairman of the Board informed the Nomination Committee about the work of the Board and the committees during the year and presented the annual evaluation of the Board of Directors. The statement and proposals of the Nomination Committee at the Annual General Meeting will be announced ahead of the Meeting on 14 May 2013 on www.paresources.se. The work of the Board In 2012, the Board comprised five ordinary Board members and held a total of 29 meetings. The Board members were provided with a written agenda and complete information and decision documentation prior to each ordinary Board meeting. The company s President and CFO attended to give presentations and minutes were kept by the Board secretary. At each ordinary Board meeting, the President submitted an update of business activities that included production and sales data, financial reporting, oil-price trends, share-price trends, analysts estimates, shareholder statistics and a review of the company s ongoing projects. The Board s work was intensive and focused on the areas described in the figure below. Members of PA Resources Nomination Committee prior to the AGM 2013 Representative Shareholder Holding/votes Sven A. Olsson Gunvor Group Ltd 6.4% Bengt Stillström AB Traction 3.0% Göran Ågerup Ågerup Fastigheter AB 2.7% Hans Kristian Rød Chairman of the Board N/A Contact the Nomination Committee Shareholders may submit proposals to the Nomination Committee at any time via e-mail to: valberedningen@paresources.se Proposals must be submitted in good time prior to the AGM for the Nomination Committee to be able to take the proposal into consideration. More information is available at www.paresources. se/en/corporate_governance. The Board s work in 2012 Fourth quarter Capital and financing issues ahead of resolution and proposal to perform a set-off issue and subsequent rights issue Review of the asset portfolio and any needs for impairment Review and update of the business model, strategies and prioritised projects Budget and work programme for 2013 Interim report for the third quarter Review and evaluation of the farm-out processes Q4 Q1 First quarter Year-end report Evaluation of the Board s work in 2011 Capital and financing issues Annual Report and proposed allocation of profit Agenda for the AGM and proposed guidelines for remuneration of senior executives The Remuneration Committee s evaluation of remuneration to senior executives Review and evaluation of the company s ongoing projects and farm-out processes Third quarter Interim report for the second quarter Capital and financing issues Review and evaluation of the company s ongoing projects and farm-out processes Q3 Q2 Second quarter Interim report for the first quarter Capital and financing issues Follow-up of liquidity More in-depth review and analysis of the Azurite field Review and evaluation of the company s ongoing projects and farm-out processes 34 PA RESOURCES ANNUAL REPORT 2012

Board of Directors Report Corporate governance report The Remuneration Committee s work In 2012, the Remuneration Committee comprised the Chairman of the Board and Board members Lars Olof Nilsson and Catharina Nystedt- Ringborg. The Chairman of the Board is also Chairman of the Committee. One meeting was held during the year and the work primarily dealt with the following areas: The Remuneration Committee s evaluation of remuneration to senior executives Proposals for guidelines for remuneration of senior executives The Audit Committee s work The Audit Committee comprised the Chairman of the Board and the Board members Per Jacobsson and Lars Olof Nilsson. Lars Olof Nilsson is Chairman of the Committee and the company is represented by the President and CFO. A total of six meetings were held during 2012 and the work principally focused on review and approval of the company s interim reports and year-end report. At the meeting held in conjunction with year-end report in February, a deeper review was performed of the auditor s report. Evaluation of the Board s work An annual evaluation of the Board s work was performed by the Norwegian consulting firm Mindex. The evaluation focused in part on the Board s external relationships to shareholders, business activities, transparency and reputation and in part on internal issues pertaining to decision quality, the Board s administration as well as the Board s composition and competence. The results were presented to and discussed by the Board and have also been distributed to the Nomination Committee. External auditors The company s auditors reported their observations from reviews of internal control, financial reporting and the annual financial statements to the Audit Committee. Through the Audit Committee, the Board had one additional meeting with the company s auditor in 2012. The appointed auditor is Ernst & Young AB, with Authorized Public Accountant Björn Ohlsson as auditor in charge. Björn Ohlsson has been the company s auditor since 2012. In addition to the established review of PA Resources interim report for the second quarter, in conjunction with the publication of the prospectus for the set-off issue of convertible bonds, the auditors performed a review of the interim report for the third quarter 2012. Furthermore, Ernst & Young AB were consulted on areas including taxes, various accounting and financing issues, and issues related to the two transactions performed at the end of 2012 and in early 2013. Ernst & Young is obligated to test its independence prior to any decision to provide independent advice outside of its audit assignment for PA Resources. Remuneration of Management and Board Guidelines for remuneration Guidelines for the remuneration of senior executives at PA Resources is adopted at the Annual General Meeting and apply to the existing President and the company s CFO who are members of the Group management. PA Resources offers a total remuneration package at market rates that enables qualified senior executives to be recruited and retained. Fixed salary and other remuneration must be proportional to the employee s level of responsibility and authority. The total remuneration package includes: Read the Board's complete proposals for guidelines and other material ahead of the 2013 AGM at www.paresources.se/en/corporate_governance fixed salary variable remuneration linked to clearly defined and measurable goals, which is not permitted to exceed fixed salary paid over the applicable time period defined-contribution based pension provisions other benefits including company car, computer and mobile phone termination pay and severance pay which may not exceed 18 months fixed salary The Board s proposal for remuneration guidelines prior to the Annual General Meeting 2013 agrees with the policies applied thus far. The Board s full proposal regarding guidelines and other material ahead of the Annual General Meeting 2013 will be available on www.paresources.se/ corporate governance. Long-term bonus scheme Due to the share price trend for the company s shares as well as the setoff issue and rights issue at the end of 2012 and the beginning of 2013, the Board decided to cancel the bonus system introduced in September 2011 for employees of the PA Resources Group. The company s Board, under the auspices of the Remuneration Committee, intend to evaluate a new bonus system as soon as the new issues have been completed. Only a minority of employees are included in the old bonus system dating back to 2008, but none of these individuals are senior executives. Remuneration of senior executives Senior executives are defined as the President and CFO who are part of PA Resources Group management. Their remuneration in 2012 is reported under Note 8 on page 58. According to the terms of employment applicable to the company s President and CFO, they are entitled to individual performance-based bonuses amounting to a maximum of three months salary per year based on meeting individually agreed targets. Remuneration of Board of Directors Fees to the Board of Directors of PA Resources are set at the Annual General Meeting in line with proposals from the Nomination Committee. In 2012, fees were paid as detailed on page 37. Remuneration of auditors In 2012, fees paid to auditors were as detailed in Note 11 on page 59. Internal control pertaining to financial reporting The Board has ultimate responsibility for the compliance of internal control of the financial reporting with external regulations. These regulations comprise requirements for publication of information and the organisation of internal control, and are aimed at ensuring accurate and reliable financial reporting and accounting in line with the applicable laws, ordinances, accounting standards and other requirements for listed companies. Framework PA Resources internal control process is based on the COSO framework (The Committee of the Sponsoring Organizations of the Treadway Commission) and is based on the five internal control elements described below. Control environment The internal control structure of PA Resources builds on a clear division of responsibilities between the Board and the President as well as the bodies established by the Board, that is, the Audit Committee and the Remuneration Committee. This written work plan is updated and adopted PA RESOURCES ANNUAL REPORT 2012 35

Board of Directors Report Corporate governance report each year by the Board and states which supporting documentation and which financial information is to be presented to the Board in conjunction with each ordinary meeting. The President is responsible for the Board receiving the necessary reports to enable the Board to assess the company s and the Group s financial position. The information comprises presentation and analysis of the earnings trend, cash flow and financial position as well as budget and forecasts including ongoing follow-up of these. The mandate of the Audit Committee is to monitor and ensure quality is maintained for the company s financial reporting. Efforts focus on assessing the effectiveness of the company s internal controls and on assessments of estimates and reported values that could impact the quality of reporting. The Audit Committee keeps informed about the audit of interim reports, the Annual Report and consolidated financial statements through the presence of the company s auditor at certain meetings. The President and CFO of PA Resources attend Audit Committee meetings and the members of the Audit Committee also have ongoing contact with these two officers. The control environment at PA Resources determines individual and collective attitudes within the Group and is defined and maintained primarily by: The organisational structure, the corporate culture, employee competence, decision-making paths and methods of conducting operations Overriding policy documents encompassing policies and directives for the various business activities and functions Responsibilities and authorities defined through various policies, instructions pertaining to signing authority, manuals, procedures and codes Laws and external rules and regulations. Risk assessment The risk of material errors or deviations from the disclosure requirements may exist in conjunction with the accounting and valuation of assets, liabilities, revenue and expenses. Risk assessment in the financial reporting is aimed at establishing the material risks that impact reporting in Group companies and various processes. A controlling framework has been established with regard to reporting, procedures and detailed timetables for closing the accounts and forecasts for the purpose of minimising these risks. The Board and management of PA Resources assess the ongoing reporting from a risk perspective. Comparisons are made of income statement and balance sheet items with regard to materiality and complexity and of earlier reporting and budget. The internal control structure is adjusted to meet any change that occurs in the risk assessment. In addition to the assessment of risk in the financial reporting, the Board and management work on an ongoing basis to identify and manage material risks that impact the business activities of PA Resources from an operational and financial perspective. The most significant risks are described in the section Risks and risk management on page 30 31 and in Note 33, but are not encompassed by the internal control structure. Control activities and follow-up Control activities involve all levels of the organisation. The activities limit identified risks and ensure correct and reliable financial reporting. The Group s central controller function analyses and follows up budget deviations, produces forecasts, follows up any material variations between periods and reports higher up in the organisation thus minimising any risk of errors in the financial reporting. Control activities also encompass the follow-up and comparison of earnings trends or any individually significant items, the reconciliation of accounts and balance statements as well as approval of all business transactions and collaboration agreements, instructions pertaining to powers of attorney or signing authorisation and accounting and valuation policies. The Group s central accounting function performs regular internal follow-ups of outcomes, deviations and forecasts together with the regional accounting manager, which also address current accounting and reporting issues. To ensure the efficiency and standardisation of accounting, reporting and consolidation processes, the company has implemented a joint consolidation and a shared accounting system for certain subsidiaries. The joint venture agreements, concluded by PA Resources within the framework of its business activities, contain standardised conditions pertaining to audit right that provide PA Resources, as a partner in the licence, with the opportunity of performing an audit of the party that is the operator of the licence. The purpose of the audit is to ensure that reporting and accounting procedures are adhered to and expenses recognised pursuant to the joint-venture agreement. Information and communication The provision of information at all levels within the Group and with the external parties concerned is a key component of internal control. Relevant policies, guidelines and principles for accounting are made available to all employees affected which should contribute to complete, correct and timely financial reporting. In addition, regular updates are provided and messages regarding changes in accounting policies as well as requirements applying to reporting and the provision of information. All subsidiaries and operative units submit regular financial reports and reports covering their operations to the Group management and to the Group s central accounting function. A communication policy is in place that describes how, by whom and in which manner external information is to be communicated to ensure that such external provision of information is correct, complete and that it complies with those requirements applicable to listed companies. On the company s website, www.paresources.se, financial reports, production reports, press releases, presentation material, webcasts, teleconferences and various key ratios are published on an ongoing basis. Activities in 2012 Revised and increased scope for tax reporting from the Group s subsidiaries In-depth analysis of the Group s taxes Continued focus on liquidity and cash flow reporting as well as follow-up from the regions Continued development and implementation of the Group-wide consolidation system and start-up of implementation of the integrated analysis package Continued improvement of processes and procedures for interim reports to enable increased efficiency and quality assurance Development of central administrative procedures pertaining to archiving and documentation for all Group companies. 36 PA RESOURCES ANNUAL REPORT 2012

Board of Directors Report Corporate governance report The Board of Directors Hans Kristian Rød Per Jacobsson Lars Olof Nilsson Catharina Nystedt-Ringborg Paul Waern Function Chairman of the Board Board member Board member Board member Board member Year of election Board member since May 2009, Chairman since May 2011 May 2011 May 2008 May 2006 May 2009 Born 1953 1969 1962 1951 1950 Education Main occupation Other assignments Previous experience Shareholding in PA Resources, 8 Feb. 2013 M.Sc. in Business and Economics, Master of Business Administration Corporate Representative for the Fortum Corporation in Norway Chairman of Infragas Norge AS, Deputy Chairman of Infratek ASA and Fredrikstad Energi AS, Board member of Hafslund ASA. President of Fortum Nordic AB (Norwegian branch). Chairman and President of a number of Norwegian subsidiaries in the Fortum group President of Fortum Corporation Exploration and President of Fortum Petroleum AS Through companies: 5,252,019 M.Sc. in Economic history and B.Sc. in Business administration Board member and Managing Director for Celvic Investments AB and Ulla Seaton Invest AB. Board member of Celvigo AB Board member of KenolKobil Ltd., Advisor for Kapitalförvaltning i Stockholm AB and FL Communications AB, Deputy Board member of A E Einarssons Byggnads AB Director at Jakobsson Fastighetsförvaltning i Stockholm AB, and Sales Manager respectively Budget Controller at Kobil Petroleum Ltd and Kenya Oil Company Ltd in Kenya. Previously a Board member of subsidiaries to the Kenya Oil Company Ltd Through companies: 5,953,019 M.Sc. in Business and Economics Board work and consultant for Evli Bank Chairman of Lappland Goldminers AB, AGL Treasury Support AB and AGL Transaction Services AB as well as Board member of BE Group AB and Kaptensbacken AB Head of Group Treasury and Group Business Development at Trelleborg AB, Board member of a number of companies Direct holding: 426,301 Through companies: 113,477 Bachelor of Economics, Master of Political Science and MBA in International Business Management and interpreter training, Sorbonne Board work and advisor in the energy sector Board member of CN-R Affärsutveckling AB, Svenskt Pantlotteri AB and Solarus Sunpower Sweden AB as well as Deputy Board member of Antrepo Aktiebolag. Advisor for Vattenfall AB and Areva Board member of several international energy companies and Managing Director of Swedish Water Development AB, Senior VP of ABB Ltd and Fläkt AB as well as other positions in AGA Systèmes Infrarouges SARL, Swedish Government Offices and OECD Through companies: 3,540,000 Independent* Yes Yes Yes Yes Yes Attendance at Board meetings Attendance at Remuneration Committee Attendance at Audit Committee Annual fee for Board work including committee work M.Sc. in Mining 29 of 29 29 of 29 29 of 29 27 of 29 29 of 29 1 of 1 1 of 1 1 of 1 6 of 6 6 of 6 6 of 6 Drilling Supervisor at Norsk Sockel Board member of Petrotech Aktiebolag, Deputy Board member of Gummicentralen Ivarsson AB as well as procurement officer at Örby Säteri 30 years international experience from the oil and gas industry Direct holding: 150,000 SEK 550,000 SEK 275,000 SEK 275,000 ** SEK 275,000 SEK 275,000 * According to the Code, the member is considered independent of the company, its management and major shareholders of the company (shareholding larger than 10%). ** In addition to director fees, a consulting fee of SEK 100,000 was paid to Lars Olof Nilsson s company Kaptensbacken for work in conjunction with the recapitalisation. For more information, see Note 8, Remuneration and other benefits; Board of Directors and senior executives on page 58. PA RESOURCES ANNUAL REPORT 2012 37

Board of Directors Report Corporate governance report Executive management Group Management Regional Management Bo Askvik Function President and CEO CFO Year of employment 2007. President and CEO since 2010, CFO 2007-2010 Nicolas Adlercreutz* 2010 Born 1958 1970 Education Previous experience Board assignments Shareholding in PA Resources, 8 Feb. 2013 M.Sc. Business and Economics CFO of Sanitec Corp, Intrum Justitia AB and SAPA and other positions at Borealis Coordination Centre, Neste Sverige AB, Östgöta Enskilda Bank and Nordstjernan AB Board member in Balkuma in Stockholm AB M.Sc. Business administration Vice President Group Control and other positions at Svenska Cellulosa Aktiebolaget SCA (publ). None 9,492,019 70,000 Function Graham Goffey Managing Director PA Resources UK and PA Resources Congo SA and Regional Manager of West Africa and the North Sea Paul Elstone Year of employment 2009 2012 Born 1964 1951 Education Previous experience Shareholding in PA Resources, 8 Feb. 2013 M.Sc. Petroleum Geology and MBA Senior positions in exploration and leading positions at LASMO, Paladin Resources plc, Sterling Energy plc, etc. 578,400 - Managing Director for PA Resources Tunisia and regional Manager for North Africa Higher Technical Education HND Senior operational positions at PA Resources Tunisia, BP (UK, USA, Trinidad, Egypt, Azerbaijan, Venezuela), NIOC (Iran) and Aramco (Saudi Arabia) * New CFO Nicolas Adlercreutz resigned his position as CFO of PA Resources in August 2012 and left the company in February 2013. Tomas Hedström was appointed the new CFO and a member of the Group Management in February 2013, and will take up his position not later than 1 August 2013. Tomas Hedström joins the company from his position as CFO of Rottneros AB. Prior to that, he served in several leading international positions at SCA. 38 PA RESOURCES ANNUAL REPORT 2012

Financial reports 5 year summary 5 year summary 31 Dec. 2012*** 31 Dec 2011*** 31 Dec. 2010 31 Dec. 2009 31 Dec. 2008 Revenue SEK 000s 2,183,527 2,153,808 2,226,732 2,112,841 2,419,863 EBITDA SEK 000s 1,255,435 1,295,250 1,275,676 1,325,877 1,771,823 Operating result SEK 000s -1,063,709-1,526,609 490,424 429,601 1,395,749 Operating profit excluding one-off costs*** SEK 000s 683,964 508,057 490,424 429,601 1,395,749 Operating profit per share after dilution** SEK -1.28-2.39 0.94 1.35 4.64 Operating margin -49% -71% 22% 20% 58% Operating margin excluding one-off costs 31% 24% 22% 20% 58% Income after financial items per share after dilution** SEK -2.00-2.94 0.34 1.00 2.74 Earnings per share after dilution** SEK -2.36-3.27-0.61 0.04 3.08 Return on equity neg neg neg 0.28% 23.93% Return on assets neg neg 5.13% 5.00% 16.30% Return on capital employed neg neg 6.06% 6.33% 19.47% Equity per share before dilution** SEK 0.22 4.42 7.54 13.41 15.86 Equity per share after dilution** SEK 0.22 4.42 7.54 13.41 15.80 Profit margin -76.2% -87.1% 8.1% 15.0% 34.0% Equity/assets ratio 24.7% 31.7% 44.1% 44.6% 45.5% Debt/equity ratio 165.4% 141.4% 65.2% 80.4% 74.8% Share price at end of period* SEK 0.20 2.12 7.50 11.93 5.58 Share price/equity per share before dilution* Times 0.89 0.48 0.99 0.89 0.35 P/E multiple per share* Times -0.08-0.65-12.36 295.22 1.81 Number of shares outstanding before dilution** Number 7,093,247,924 637,476,893 637,475,843 345,814,769 299,968,388 Number of shares outstanding after dilution** Number 7,093,247,924 637,476,893 637,475,843 345,814,769 300,999,108 Average number of shares outstanding before dilution** Number 832,034,544 637,476,105 521,614,740 318,998,246 299,427,260 Average number of shares outstanding after dilution** Number 832,034,544 637,476,105 521,614,740 318,998,246 300,921,829 * In connection with the completed rights issue in 2010, the share price at the end of the period was adjusted retrospectively, which has affected the ratios Share price/equity per share before dilution and P/ E multiple per share. ** The number of shares outstanding after dilution includes only shares that give rise to a dilutive effect. The rights issue carried out in 2010 gave rise to retrospective adjustments. *** Figures for 2012 include one-off costs of SEK 1,747,674 thousand, before and after tax. Figures for 2011 include one-off costs of SEK 2,034,666 thousand before tax and SEK 1,758,077 thousand after tax. Shareholders equity has been adjusted retrospectively, which has given rise to changed key ratios related to shareholders equity. See note 2, Accounting policies etc. Key ratio definitions EBITDA is defined as operating profit excluding total depreciation, amortisation and impairment. Operating profit is defined as operating revenue less operating expenses (including depreciation, amortisation and impairment). Operating margin is defined as operating profit after depreciation and amortisation as a percentage of total revenue. Earnings per share before/after dilution is defined as profit for the period in relation to the average number of shares outstanding before/after dilution. Return on equity is defined as the moving 12-month profit after tax as a percentage of average adjusted equity. Return on total capital is defined as the moving 12-month operating profit plus adjusted financial items as a percentage of average total assets. Return on capital employed is defined as the 12-month moving operating profit plus adjusted financial items as a percentage of average capital employed (total assets less non-interest-bearing liabilities including deferred tax liabilities). Shareholders' equity per share before/after dilution is defined as the Group's reported equity in relation to the number of shares outstanding before/after dilution. Profit margin is defined as profit after net financial items as a percentage of total revenue. Equity/assets ratio is defined as the Group s reported equity as a percentage of total assets. Debt/equity ratio is defined as the Group's interest-bearing liabilities less cash and cash equivalents in relation to adjusted equity. P/E multiple per share is defined as the share price at the end of the period in relation to profit after tax, divided by the average number of shares outstanding before dilution. PA RESOURCES ANNUAL REPORT 2012 39

Financial reports group Income statement Group SEK 000s Notes Jan.-Dec. 2012 Jan.-Dec. 2011 Revenue 4 2,183,527 2,153,808 Cost of sales 5, 12-750,409-707,401 Other external expenses 10, 11, 12-110,859-85,057 Personnel expenses 7, 8, 9-66,824-66,100 Depreciation, amortisation and impairment losses* 16, 17, 18-2,319,144-2,821,859 Operating profit 6-1,063,709-1,526,609 Financial income 13 5,503 63,695 Financial expenses 13-604,820-414,042 Total financial items -599,317-350,347 Profit before tax -1,663,026-1,876,956 Income tax 14-302,719-206,940 Profit for the year* -1,965,745-2,083,896 Profit for the year attributable to: Owners of the parent -1,965,745-2,083,896 Earnings per share before dilution 15-2.36-3.27 Earnings per share after dilution 15-2.36-3.27 Earnings per share are attributable to owners of the parent. * The year 2012 includes one-off costs of SEK 1,747,674 thousand before and after tax. Figures for 2011 include one-off costs of SEK 2,034,666 thousand before tax and SEK 1,758,077 thousand after tax. Statement of comprehensive income Group SEK 000s Notes Jan.-Dec. 2012 Jan.-Dec. 2011 Restated* Profit for the year -1,965,745-2,083,896 Other comprehensive income Exchange differences during the year -228,690 95,305 Exchange difference effect from liquidation 0-328 Available-for-sale financial assets 26 0-22 Income tax relating to available-for-sale financial assets 14 0 2 Total other comprehensive income -228,690 94,957 Total comprehensive income -2,194,435-1,988,939 Total comprehensive income attributable to: Owners of the parent -2,194,435-1,988,939 * See Note 2, Accounting principles etc. 40 PA RESOURCES ANNUAL REPORT 2012

Financial reports group Statement of financial position Group SEK 000s Notes 31 Dec. 2012 31 Dec. 2011 *Restated 1 Jan. 2011 *Restated ASSETS Non-current assets Exploration and evaluation assets 16, 18 3,398,281 4,225,979 3,443,734 Oil and gas properties 16, 18 2,125,970 3,667,313 5,488,024 Machinery and equipment 17 4,381 15,499 18,397 Financial assets 26 1,055 1,482 2,185 Deferred tax assets 14 103,412 0 0 Total non-current assets 5,633,099 7,910,273 8,952,340 Current assets Inventory 19 30,871 59,313 5,034 Accounts receivable and other receivables 20 713,919 840,722 677,117 Current tax assets 14 3,076 7,069 3,168 Cash and cash equivalents 21 57,631 44,465 1,260,393 Total current assets 805,497 951,569 1,945,712 Assets held for sale 30 0 29,923 0 TOTAL ASSETS 6,438,596 8,891,765 10,898,052 EQUITY AND LIABILITIES Equity attributable to owners of the parent 22, 34 Share capital 709,325 318,738 318,738 Other capital contributions 4,341,929 3,764,144 3,764,137 Reserves -1,088,644-859,954-954,911 Retained earnings and profit for the year -2,372,353-406,608 1,677,288 Total equity 1,590,257 2,816,320 4,805,252 Liabilities Non-current liabilities Interest-bearing loans and borrowings 23 399,832 3,170,186 2,767,310 Deferred tax liabilities 14 700,870 742,251 853,769 Provisions 24 633,948 571,458 429,884 Total non-current liabilities 1,734,650 4,483,895 4,050,963 Current liabilities Provisions 24 0 8,447 0 Current tax liabilities 14 252,172 89,644 70,746 Derivative financial instruments 26 0 0 9,523 Current interest bearing loans and borrowings 23 2,287,978 856,369 1,627,695 Accounts payable and other liabilities 25 573,539 634,355 333,873 Total current liabilities 3,113,689 1,588,815 2,041,837 Liabilities pertaining to assets held for sale 30 0 2,735 0 TOTAL EQUITY AND LIABILITIES 6,438,596 8,891,765 10,898,052 PLEDGED ASSETS 28 733,044 1,347,736 2,179,630 CONTINGENT LIABILITIES 28 14,000 14,000 14,000 * See Note 2, Accounting principles etc. PA RESOURCES ANNUAL REPORT 2012 41

Financial reports group Statement of changes in equity Group Equity attributable to owners of the parent SEK 000s Notes Share capital Other capital contribution Reserves Retained earnings and profit for the year Total Balance at 1 January 2011 318,738 3,764,137-954,911 2,122,026 5,249,990 Adjustment of opening balance* -444,738-444,738 Adjusted balance at 1 January 2011* 318,738 3,764,137-954,911 1,677,288 4,805,252 Profit for the year -2,083,896-2,083,896 Total comprehensive income for the period* 94,957 94,957 Transactions with shareholders Redemption convertible shares 22, 23 0 7 7 Closing balance at 31 December 2011* 318,738 3,764,144-859,954-406,608 2,816,320 Balance at 1 January 2012 318,738 3,764,144-859,954-406,608 2,816,320 Profit for the year -1,965,745-1,965,745 Total comprehensive income for the period -228,690-228,690 Transactions with shareholders Redemption convertible shares 22, 23 1 5 6 Reduction share capital 34-254,991 254,991 0 Set off issue 34 645,577 322,789 968,366 Closing balance at 31 December 2012 709,325 4,341,929-1,088,644-2,372,353 1,590,257 * Adjustment of opening balance pertains to retrospective adjustments related to previously unreported deferred tax liabilities in Tunisia. For further information, see Note 2, Accounting policies etc. As per 31 December 2012, following the completed set-off issue, the number of shares outstanding was 7,093,247,924. In connection with the extraordinary general meeting on 7 December 2012, the decision was made to change the share quota value from SEK 0.50 to SEK 0.10, entailing a decrease in the share capital by SEK 254,991 thousand. The share capital as per 31 December 2012 was distributed among 637,477,652 A-shares and 6,455,770,272 B-shares, with a share quota value of SEK 0.10. No dividend was decided on for the 2011 financial year or previous financial years. The Board of Directors proposes to the Annual General Meeting that no dividend be paid for the 2012 financial year. Reserves pertain to effects from translation of operations in foreign currency. 42 PA RESOURCES ANNUAL REPORT 2012

Financial reports group Statement of cash flow Group SEK 000s Notes Jan.-Dec. 2012 Jan.-Dec. 2011 Cash flow from operating activities Income after financial items* -1,663,026-1,876,956 Adjustments for non-cash items 2,540,015 2,723,783 Income tax paid -5,134-45,227 Total cash flow from operating activities before changes in working capital 871,855 801,600 Cash flow from changes in working capital Change in inventory 367-50,851 Change in receivables 296,369-198,709 Change in liabilities -330,311 259,526 Cash flow from operating activities 838,280 811,566 Cash flow from investing activities Investments in exploration and evaluation assets 16-48,157-573,287 Investments in oil- and gas properties 16-206,785-1,032,416 Investments in machinery and equipment 17-75 -6,911 Cash flow from investing activities -255,017-1,612,614 Cash flow from financing activities Loans raised 196,151 2,131,298 Amortisation of debt -764,320-2,539,515 Cash flow from financing activities -568,169-408,217 Cash flow for the year 15,094-1,209,265 Cash and cash equivalents at the beginning of year 21 44,465 1,260,393 Exchange rate difference in cash and cash equivalents -1,928-6,663 Cash and cash equivalents at end of year 21 57,631 44,465 Adjustments for non-cash items Depreciation, amortisation and impairment losses 16, 17, 18 2,319,144 2,821,859 Accounting fair value of financial instruments 0-9,523 Valuation Oil Sales -154,080-322,994 Other items including accrued interest and exchange differences (net) 374,951 234,441 Total 2,540,015 2,723,783 * The amount includes interest received at SEK 10,693 thousand (9,914), of which SEK 36 thousand (0) is attributable to current operations, and SEK 10,657 thousand (9,914) to financing activities and interest paid at SEK 401,940 thousand (264,297), of which SEK 32 thousand (0) is attributable to current operations and SEK 401,908 thousand (264,297) to financing activities. PA RESOURCES ANNUAL REPORT 2012 43

Financial reports Parent company Income statement Parent company SEK 000s Notes Jan.-Dec. 2012 Jan.-Dec. 2011 Net sales 4 28,128 26,300 Other external expenses 10, 11, 12-32,493-19,842 Personnel expenses 7, 8, 9-19,978-19,038 Depreciation, amortisation and impairment losses 17-95 -144 Operating profit 6-24,438-12,724 Result from participations in Group companies 31-36,023-1,461,753 Financial income and similar 13 101,783 479,516 Financial expenses and similar 13-868,941-469,111 Total financial items -803,181-1,451,348 Profit before tax -827,619-1,464,072 Income tax 14 136,293 12,116 Profit for the year -691,326-1,451,956 Statement of comprehensive income Parent company SEK 000s Notes Jan.-Dec. 2012 Jan.-Dec. 2011 Profit for the year -691,326-1,451,956 Other comprehensive income Available-for-sale financial assets 26 0-22 Income tax relating to available-for-sale financial assets 14 0 2 Total other comprehensive income 0-20 Total comprehensive income -691,326-1,451,976 44 PA RESOURCES ANNUAL REPORT 2012

Financial reports Parent company Balance sheet Parent company SEK 000s Notes 31 Dec. 2012 31 Dec. 2011 ASSETS Exploration and evaluation assets 16 91,543 88,082 Machinery and equipment 17 6 102 Financial assets Shares in subsidiaries 27 2,190,823 2,190,812 Receivables Group companies 26 3,930,357 5,874,008 Deferred tax assets 14 103,412 0 Total non-current assets 6,316,141 8,153,004 Current tax assets 14 984 984 Other receivables 20 2,048 1,552 Prepaid expenses and accrued income 20 113,423 8,074 Cash and cash equivalents 21 16,134 21,286 Total current assets 132,589 31,896 TOTAL ASSETS 6,448,730 8,184,900 SHAREHOLDERS EQUITY 22 Restricted equity Share capital 709,325 318,738 Statutory reserve 985,063 985,063 Total restricted equity 1,694,388 1,303,801 Non-restricted equity Share premium reserve 3,071,510 2,748,716 Profit/loss brought forward and result for the year -2,089,877-1,653,542 Total non-restricted equity 981,633 1,095,174 Total shareholders equity 2,676,021 2,398,975 LIABILITIES Liabilities Group companies 26 1,334,712 2,637,681 Interest-bearing loans and borrowings 23 350,965 2,789,399 Deferred tax liability 14 0 32,881 Total non-current liabilities 1,685,677 5,459,961 Accounts payable 25 3,030 3,221 Other liabilities 25 376 391 Current interest-bearing loans and borrowings 23 1,936,110 173,085 Accrued expenses and prepaid income 25 147,516 149,267 Total current liabilities 2,087,032 325,964 TOTAL SHAREHOLDERS EQUITY AND LIABILITIES 6,448,730 8,184,900 PLEDGED ASSETS 28 726,489 1,347,210 CONTINGENT LIABILITIES 28 14,000 14,000 PA RESOURCES ANNUAL REPORT 2012 45

Financial reports Parent company Statement of changes in equity Parent company Restricted equity Non-restricted equity SEK 000s Notes Share capital Statutory reserve Reserves Other capital contribution Retained earnings Profit for the year Total equity Balance at 1 January 2011 318,738 985,063 20 2,748,709 89,143-290,729 3,850,944 Transfer of previous year s result -290,729 290,729 0 Profit for the year -1,451,956-1,451,956 Total comprehensive income for the period -20-20 Transactions with shareholders Redemption convertible shares 22, 23 0 7 7 Closing balance at 31 December 2011 318,738 985,063 0 2,748,716-201,586-1,451,956 2,398,975 Balance at 1 January 2012 318,738 985,063 0 2,748,716-201,586-1,451,956 2,398,975 Transfer of previous year s result -1,451,956 1,451,956 0 Profit for the year -691,326-691,326 Total comprehensive income for the period 0 0 Transactions with shareholders Redemption convertible shares 22, 23 1 5 6 Reduction share capital 34-254,991 254,991 0 Set off issue 34 645,577 322,789 968,366 Closing balance at 31 December 2012 709,325 985,063 0 3,071,510-1,398,551-691,326 2,676,021 46 PA RESOURCES ANNUAL REPORT 2012

Financial reports Parent company Statement of cash flow Parent company SEK 000s Notes Jan.-Dec. 2012 Jan.-Dec. 2011 Cash flow from operating activities Income after financial items* -827,619-1,464,072 Adjustments for non-cash items 616,611 1,256,465 Income tax paid 0 0 Total cash flow from operating activities before change in working capital -211,008-207,607 Cash flow from changes in working capital Change in receivables -10,494 1,906 Change in liabilities -175,097-112,426 Cash flow from operating activities -396,599-318,127 Cash flow from investing activities Loans given to subsidiaries 0-794,598 Intra Group acquisition exploration and evaluation assets 16 0-83,305 Investments in exploration- and evaluation assets 16-3,461-4,777 Cash flow from investing activities -3,461-882,680 Cash flow from financing activities Loans raised from subsidiaries 303,322 0 Loans raised 91,586 1,279,992 Amortisation of debt 0-1,139,146 Cash flow from financing activities 394,908 140,846 Cash flow for the year -5,152-1,059,961 Cash and cash equivalents at the beginning of the year 21 21,286 1,081,247 Cash and cash equivalents at the year-end 21 16,134 21,286 Adjustments for non-cash items Depreciation, amortisation and impairment 16, 17, 18 95 144 Impaiment losses participations in Group companies 26 0 26,049 Impaiment losses Intercompany receivables 26 1,931,364 1,435,704 Dividend recieved -1,895,341 0 Accounting fair value of financial instruments 125,394-9,523 Other items including accrued interests and exchange gains and losses (net) 455,099-195,909 Total 616,611 1,256,465 * The amount includes interest received at SEK 997 thousand (4,654), of which SEK 36 thousand (0) is attributable to current operations, and SEK 961 thousand (4,654) to financing activities and interest paid at SEK 348,882 thousand (218,286), of which SEK 32 thousand (0) is attributable to current operations and SEK 348,850 thousand (218,286) to financing activities. PA RESOURCES ANNUAL REPORT 2012 47

Financial reports notes Content notes Note Page 1 Company information 49 2 Accounting principles etc 49 2.1 Description of significant accounting principles 49 2.2 Changes in accounting principles and disclosures 52 2.3 Standards, amendments and interpretions that were adopted by the EU and which entered force in 2012 52 2.3.1 Standards, amendments and interpretions which have not yet entered into force and have not been applied in advance by the Group, but which have been adopted by the EU. 52 2.4 Critical accounting principles, estimates and assumptions 53 2.5 Significant judgements in the application of the Group s accounting principles 53 3 Acquisitions of operations and licence shares 54 4 Revenue 54 5 Cost of sales 54 6 Segment information 54 7 Employees, salaries and remuneration 57 8 Remuneration and other benefits; Board of Directors and senior executives of the Parent Company 58 9 Share-based incentive schemes 58 10 Other external expenses 58 11 Remunerations to auditors 59 12 Leasing 59 13 Financial income and expenses 59 14 Income tax 60 15 Earnings per share 61 16 Exploration- and evaluation assets and Oil- and gas properties 62 17 Machinery and equipment 63 18 Impairment testing Exploaration- and evaluation assets and oil-and gas properties 64 19 Inventories 64 20 Accounts recievable and other recievables 65 21 Cash and cash equivalents 65 22 Equity 65 23 Interest-bearing loans and borrowings 66 24 Provisions 67 25 Accounts payable and other liabilities 67 26 Financial instruments 68 27 Shares in subsidiaries 71 28 Pledged assets and contingent liabilities 72 29 Related party disclosure 72 30 Assets held for sale 72 31 Parent company s result from interest in Group companies 72 32 Significant events after the closing date 72 33 Financial risk 73 34 Effects of set-off and rights issue 75 48 PA RESOURCES ANNUAL REPORT 2012

Financial reports notes Note 1 Company information The Parent Company PA Resources AB (publ) is a Swedish limited company domiciled in Stockholm (corporate identity number 556488-2180). The Group s business consists of the acquisition, development and production of oil and gas reserves as well as exploration to find new reserves. The Parent Company s functional currency, and the currency in which the accounts are presented, is Swedish kronor (SEK). This annual report and the consolidated accounts of PA Resources AB (publ) for the year ending 31 December 2012 were approved for publication by the Board of Directors on 22 March 2013 and will be submitted for adoption at the Annual General Meeting on 14 May 2013. Note 2 Accounting principles etc Note 2.1 Description of significant accounting principles The sections within this Annual Report which are classified as formal financial reports according to IFRS are: the consolidated Income Statement, Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity and Statement of Cash Flows the Parent Company s Income Statement, Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity and Statement of Cash Flows the notes to the financial reports Basis for preparation of the financial statements The consolidated financial statements are based on historical acquisition costs except in the case of financial instruments, which are reported at fair value and outstanding Group crude oil inventories which are given a market value at the balance sheet date and recognised as if the inventories had been sold. Unless otherwise indicated, all amounts are reported in thousands of Swedish kronor (SEK thousand). Statement of conformity with regulations applied The consolidated financial statements and the financial statements for the Parent Company have been prepared in accordance with International Financial Reporting Standards (IFRS) including interpretation statements issued by the International Financial Reporting Interpretations Committee (IFRIC) and in accordance with Swedish laws. Since the Parent Company is a company within the EU, only IFRS adopted by the EU are applied. In addition, the Annual Accounts Act and the Swedish Financial Reporting Board s recommendation RFR 1, Supplementary Accounting Rules for the Group have been applied. The financial statements for the Parent Company have been prepared applying recommendation RFR 2, Accounting for Legal Entities, statements from the Swedish Financial Reporting Board and the Annual Accounts Act. Consolidated financial statements Basis of consolidation: The consolidated financial statements encompass the Parent Company and its subsidiaries. The financial reports for the Parent Company and the subsidiaries included in the consolidated financial statements cover the same period and have been prepared in accordance with the same accounting principles as applied for the Group. All intra-group transactions and accounts, as well as gains and losses on transactions between Group companies are eliminated entirely. A subsidiary or its assets and liabilities are included in the consolidated financial statements from the acquisition date, which is the day a controlling influence in the subsidiary arises, and are included in the consolidated financial statements until the day the controlling influence ceases. Controlling influence means the right to formulate the subsidiary s operational and financial strategies with a view to obtaining financial benefits. Acquisitions of operations are reported in the consolidated financial statements using the purchase method of accounting. The purchase method of accounting means, among other things, that the acquisition cost of the shares is distributed to the assets, commitments taken over and liabilities acquired at the acquisition date based on their fair values at the time. If the acquisition cost exceeds the fair value of the acquired company s net assets, the excess value is first allocated to acquired oil and gas properties and thereafter, any difference is recognised as goodwill. If the acquisition cost is lower than the fair value of the acquired company s net assets, the difference is reported directly in the income statement. Restatement of opening balance In connection with the process of farming out ownership interests in the Zarat licence, PA Resources conducted an analysis of the Tunisian tax situation. This resulted in an adjustment of previously unreported deferred tax liabilities pertaining to periods before 2011 by a total of SEK -444,738 thousand, which was reported directly against shareholders equity for the period in 2011. The periods thereafter have been adjusted within other comprehensive income, with respect to exchange differences, as the underlying deferred tax liabilities are booked in USD. Thus the Group s income statement has not been affected by this adjustment. Nor has the statement of cash flows been affected by these retrospective adjustments, since they pertain in their entirety to unrealised changes in value. Changed presentation of non-current assets PA Resources has during the year, changed its presentation of non-current assets in the balance sheet and in the segment reporting. Intangible non-current assets and property, plant and equipment are categorised as from 31 December 2012 as exploration and evaluation assets and oil and gas properties. Comparative figures for 31 December 2011 have been recalculated and are reported in accordance with the new categorisation. Segment reporting The Group is organised and managed by geographical regions which correspond with the reportable operating segments that are followed up internally at operational level. The geographically organised operating segments include all reporting units in their respective regions, excluding the exceptions described in Note 6 Segment information. Segment information is presented from a management perspective, which means that the information is presented in the same way as it is used in internal reporting, in accordance with the principles applied by the company s chief operating decision maker (CODM) in its operational governance, internal reporting and follow up. The Group has identified the Group Management as the CODM in this context. Reportable operating segments are lines of business or combined lines of business that fulfil certain specific criteria. The starting point for identification of reportable operating segments is internal reporting as made to and monitored by the CODM. The segments reported follow the same accounting policies as the Group in their reporting. Translation of foreign currency Functional currency and reporting currency The functional currency of each unit within the Group is determined by reference to the economic environment in which the units carry on their respective operations. Monetary receivables and liabilities in each subsidiary that are expressed in foreign currencies are translated into the functional currency at the exchange rate in force on the balance sheet date. All translation differences are reported in the income statement. The Group continuously analyses circumstances that could indicate a change in the functional currency from local currency to USD in the Group s subsidiaries. Translation of foreign operations The consolidated financial statements of PA Resources are presented in Swedish kronor (SEK), which is the Parent Company s functional and reporting currency. Assets and liabilities in other functional currencies are translated into SEK at the exchange rate effective on the balance sheet date. Income statements are translated at the average exchange rate for the year. Translation differences arising on the translation of foreign operations are reported directly against equity in the statement of comprehensive income. PA RESOURCES ANNUAL REPORT 2012 49

Financial reports notes Exchange rates The following exchange rates were used in the preparation of the financial statements: Closing day rate 31 Dec. 2012 Average rate Jan.-Dec. 2012 1 EUR in SEK 8.62 8.71 1 USD in SEK 6.52 6.78 1 TND in SEK 4.20 4.34 1 NOK in SEK 1.17 1.16 1 GBP in SEK 10.49 10.73 1 DKK in SEK 1.16 1.17 Closing day rate 31 Dec. 2011 Average rate Jan.-Dec. 2011 1 EUR in SEK 8.94 9.03 1 USD in SEK 6.92 6.50 1 TND in SEK 4.60 4.61 1 NOK in SEK 1.15 1.16 1 GBP in SEK 10.68 10.41 1 DKK in SEK 1.20 1.21 Revenue recognition Group revenue primarily refers to revenue from sales of oil and gas. Revenue is based on sales which are managed by yearly contracts signed with a small number of major international oil and gas companies in which oil and gas sold is priced at the applicable world market price less any discounts and plus any premiums due to the quality of the oil and gas equivalents. Pricing occurs during a predetermined time period prior to and following the day on which physical delivery is made from vendor to vendee. PA Resources recognizes revenue based on the working-interest share of a field s total number of barrels of oil produced. This means that PA Resources always recognises revenue corresponding to reported production for the period before deductions for taxes, such as royalties and Tax Oil. Revenue is recognised in the period production occurs, which means that any crude oil inventory is carried at fair value and recognised as sold. Interest income is recognised in accordance with the effective rate method and primarily refers to interest income from cash and cash equivalents and receivables. The majority of the Parent Company s revenue is made up of sales of services to other companies within the Group. Royalties Current license terms for some producing oil fields require royalties to be paid. The Group pays the royalty either in kind through the supply of oil or by paying a monetary royalty. Royalties are reported gross in the income statement, where total revenue includes produced royalty oil and the corresponding royalty expense is included in the income statement item Cost of sales. Jointly owned assets in the form of licenses Oil and gas operations are conducted by the Group in the form of wholly-owned or jointly-owned licenses. The Group s financial reports reflect the Group s share of production, capital and operating expenses and current assets and liabilities in the jointly-owned licenses. Remunerations to employees, Board of Directors and senior executives Short-term remunerations Salaries, other remuneration and benefits as well as social security contributions are reported as personnel expenses in the income statement when they arise. Post-employment remunerations Pension costs for defined-contribution plans are reported as personnel expenses in the income statement. The personnel, including senior executives, have defined contribution pension schemes under which the company makes fixed monthly payments to external life insurance companies during the period of employment. The pension schemes are plans for remuneration at an agreed retire ment age. PA Resources has no legal or informal duty to pay further charges if at the time payment is due to be made the external life insurance company does not have sufficient assets to pay all employees the benefits relating to premiums paid and the period of this. The schemes therefore provide entitlement to payments which primarily depend on the outcome of the life insurance companies administration of the funds. Monthly payments to the life insurance companies are made up until the date agreed in the pension schemes. More information regarding the expenses during the financial year is provided in Note 7, Employees, salaries and other remuneration. Recognition of exploration and evaluation assets as well as oil and gas properties Expenditures for exploration and evaluation of oil and gas properties are reported according to the Full Cost Method. All costs attributable to exploration, drilling and evaluation of such interests are capitalised in full. The expenditures are accumulated separately for each licence right and the capitalisation of exploration and evaluation assets, or alternatively oil and gas properties depends on the development phase that has been reached. The balance sheet item exploration and evaluation assets refers to acquired licence/concession rights and other capitalised exploration and evaluation expenditure. When PA Resources appraises and assesses an exploration permit as profit able a plan for development is applied for. On receiving the plan for development, the asset is reclassified under oil and gas properties and, in conjunction with reclassification, the assets are tested for any possible need for impairment, for the purpose of ascertaining their value. If the asset is relinquished to the government authorities or is assessed as unprofitable, the asset is expensed by PA Resources through recognition as an impairment loss in profit or loss. The balance sheet item, oil and gas properties, refers both to reclassified exploration and evaluation assets as well as capitalised development expenses. Depreciation commences for the actual asset in conjunction with the start of production. Assets are continuously tested for any possible need for impairment and where a need is identified, the asset is expensed through recognition as an impairment loss in profit or loss. Depreciation/amortisation Depreciation/amortisation of oil- and gas properties commences in conjunction with the start of production and are calculated using the Unit of Production Method and are depreciated in line with the year s production in relation to the estimated total proven and probable reserves of oil and gas. Technical installations and equipment are linear depreciated over the assets expected useful life. The estimated useful life is ten years for technical installations and five years for equipment. Recognition of machinery and equipment Machinery and equipment is valued at cost after a deduction for accumulated depreciation and any impairment losses. Linear depreciation is applied over the assets expected useful life. The estimated useful life for machinery and equipment is 3 5 years. Impairment losses PA Resources continuously assesses its exploration and evaluation assets as well as its oil and gas properties for any need for impairment. This is performed in conjunction with each balance sheet date or if there are events or changes in circumstances that indicate that carrying values of assets may not be recover able. Such indicators include changes in the Group s business plans, relinquished licences, changes in raw materials prices leading to lower revenues and, for oil and gas properties, downward revisions of estimated reserve quantities. Testing for impairment losses is performed for each cash generating unit, which corresponds to licence right, production sharing agreement or equivalent owned by PA Resources. A cash generating unit thus usually corresponds to each acquired asset in each country in which PA Resources carries on exploration and development operations. Impairment testing means that the balance sheet item amount for each cash generating unit is compared to the recoverable amount for the assets, which is the higher of the fair value of the assets less sales expenses and the value in use. The value in use of the assets is based on the present value of future cash flows discounted by weighted average cost of capital (WACC); see also Note 18 Impairment testing exploration- and evaluation assets and oil and gas properties. An impairment loss is recorded when an asset s or a cash generating unit s recorded value exceeds the value in use. Impairment losses are charged to the income statement. Reversal of impairment losses At least once every year an assessment is made as to whether there are any indications that impairment losses reported previously are no longer justified or have reduced in extent. If such indications exist, a new calculation of the recoverable amount is made. A previously recognised impairment loss is reversed only to the extent that the asset s reported value after reversal does not exceed the reported value the asset would have had if the impairment loss had never been recognised. If this is the case, the book value of the asset is increased to its recoverable amount. After a reversal the depreciation charge is adjusted in future periods to distribute the asset s revised book value over its expected remaining useful life. 50 PA RESOURCES ANNUAL REPORT 2012

Financial reports notes Inventory Outstanding inventory consist of other supplies and materials and is valued at the lower of cost and net realizable value. When assessing obsolescence of inventory items, consideration is given to the age of the inventory, the material and the rate of turnover. Any impairment of the inventory affects operating profit. Crude oil inventory Total outstanding crude oil inventory in number of barrels is carried at fair value as per the balance sheet date and is reported as if the inventory had been sold. Valuation is performed at the Brent price as per the balance sheet date less any discounts. The fair value of the crude oil inventory is recognised in the income statement as accrued income and in the balance sheet as an accrued receiv able. Financial instruments PA Resources financial instrument assets comprise accounts receivable and other receivables, other financial non-current assets and cash and cash equivalents. The assets can, on occasion, also comprise derivatives for which hedging has been performed by the Group with respect to matching the interest-bearing liability to the corresponding asset s currency risk. Financial instrument liabilities comprise interest-bearing loans and borrowings and the short-term portion thereof, derivatives, for which hedging has been performed, as well as accounts payable and other liabilities. Recognition and derecognition in the balance sheet PA Resources reports a financial asset or a financial liability in the balance sheet when the company becomes a party to the instrument s contractual terms. The company derecognises a financial liability or part thereof when the obligation stated in the relevant contract is fulfilled or otherwise terminated. PA Resources currently reports all its financial instruments gross, but net reporting is possible where there is a legal right of offset. Recognition and dereco gnition in the balance sheet are reported on the transaction date, which is the day on which PA Resources undertakes to acquire or sell the financial instrument in question. Classification by means of measurement Initial measurement PA Resources initially recognises its financial instruments at fair value plus a supplement for directly attributable transaction expenses, usually the transaction price. This principle is applied to all financial instruments apart from those in the category financial assets or liabilities carried at fair value through profit or loss, which are recognised at fair value excluding transaction expenses. At PA Resources, this category comprises only derivatives. PA Resources classifies its financial instruments in the following categories based on the purpose for which the instrument was acquired. This classification generally forms a basis for how the financial instrument is measured after it is first reported. On each closing date the company tests all its financial assets for impairment, apart from those in the category financial assets or liabilities carried at fair value through profit or loss. In the Parent Company the same measurement principles are applied, subject to the restrictions contained in Chapter 4 14 of the Swedish Annual Accounts Act; at present these restrictions result in no differences between the Parent Company and the Group. After initial recognition, the company s financial instruments are reported as described below. Subsequent measurement Financial assets measured at fair value through profit or loss In this category PA Resources classifies derivatives with a positive fair value as a separate subcategory. These are continually measured at fair value with changes in value through profit or loss. At present PA Resources has no hedging instruments that are identified as effective, and instead reports all its positive derivatives in this subcategory. PA Resources held no assets or liabilities under this category at year-end or at the end of the preceding year. Loans and receivables PA Resources classifies mainly receivables generated by the company in its operations in this category, but acquired receivables can also be included. At present it contains deposits for leased drilling equipment, accounts receivable, receivables from partners, accrued interest income, accrued income from oil inventories and cash and cash equivalents. These are measured at amortised cost, using the effective interest method established at the time of acquisition. Where accounts receivable are concerned, provision for impairment is made if there is objective evidence that the Group will not receive the amount due according to the original terms of the receivables. Impairment of accounts receivable is reported in the operating result. Available-for-sale financial assets PA Resources sees this category as a residual category containing long-term assets not classified in any other category. For the current year, there are no assets in this category and the comparative period contains other assets and inter ests. The assets are measured at fair value directly through other comprehensive income, except where impairment is applied. No impairment was applied during the year and any change in value is recognised in other comprehensive income. Financial liabilities measured at fair value through profit or loss In this category PA Resources classifies derivatives with a negative fair value as a separate subcategory. These are continually measured at fair value with changes in value through profit or loss. At present PA Resources has no hedging instruments that are identified as effective, and instead reports all its negative derivatives in this subcategory. PA Resources held no assets or liabilities under this category at year-end or at the end of the preceding year. Other financial liabilities In this category PA Resources includes Interest-bearing loans and borrowings, which are measured at amortised cost using the effective interest method which is the category s main assessment method. Within this category, secured loans can be measured at fair value. However, at present there are no loans that are secured. The company also places in this category accounts payable, the shortterm portion of interest-bearing loans and borrowings as well as other financial liabilities such as liabilities to partners as well as accrued interest expenses and accrued exploitation and drilling expenses. Compound financial instruments A compound financial instrument contains both a liability component and an equity component, which are each classified separately. PA Resources reports its convertible debentures in this way, with the liability component reported under Interest-bearing loans and borrowings within the category Other financial liabilities. Measurement of fair value PA Resources bases the fair value of financial instruments depending on available market data at time of valuation. Data are categorised into three categories; Level 1: quoted prices in active markets. Level 2: valuation based on observable market data. Level 3: valuation techniques incorporating information other than observable market data. The reported value after any impairment of accounts receivable and accounts payable is assumed to equate to their fair value, since these entries are short-term in nature. Derivatives and hedge accounting Derivatives are initially recognised at fair value at the time the contract was en tered into, with subsequent recognition within the categories of financial assets or financial liabilities measured at fair value through profit or loss. PA Resources manages its financial hedging based on identified risks, which are described in Note 33 Financial risk. From time to time, the company carries out various hedging measures to secure these risks. The company has chosen not to apply hedge accounting. The company may change this in the future, since IAS 39 allows the possibility of commencing hedge accounting. Embedded derivatives An embedded derivative is a contract with derivative-like properties, but which forms part of another contract. An embedded derivative is to be distinguished from the host contract and recognised as a separate derivative where the economic properties and risks are not closely related to those of the host contract. PA Resources holds embedded derivatives in its bond loans, known as call options, which means that the company can call for early redemption at a value in excess of the nominal amount. However, these are considered to be closely related, and as a result they are not reported separately. Borrowing costs Borrowing costs are capitalised when these refer to the purchase, construction or production of assets which necessarily take considerable time to complete for their intended use or sale. Capitalisation only takes place if it is assessed that this will involve probable economic advantage. Interest on loans referring to the acquisition and development of oil and gas properties, for which the borrowing costs can be included in the acquisition value, is capitalised during the period of time necessary to finalise the work and complete the asset for its intended use. Capitalisation of interest expenditures is begun when an acquisition is made and when investment and development costs arise, either in the oil and gas properties where the Group is operator or as allocated through invoices from operators of oil and gas properties in which the Group is a partner. The interest is capitalized through out the development phase until the asset is finally ready to start production. Other loan expenses are distributed over the terms of the loans using the effective interest method. PA RESOURCES ANNUAL REPORT 2012 51

Financial reports notes Provisions Provisions are reported in the balance sheet where there is a formal or informal commitment as a result of an event that has occurred and it is likely that an outflow of resources will be required in order to settle the commitment and the amount can be reliable estimated. The amount is discounted to present value in those cases where the time effect in each provision is significant. In some oil fields, where the Group has an obligation to contribute to, for example restoration of the environment, dismantling, removal, clean-up and similar actions around the drilling sites both onshore and offshore, provisions are reported based on the present values of the expenses expected to be required to discharge the obligations, using estimated cash flows. The discount rate used considers the time value of money and the risk specifically attributable to the provision, as assessed by the market. Provisions for asset retirement obligations are revised on a continual basis depending on future changes in estimated cash flows, the discount rate and risks attributable to the provision. An obligation arises either at the time when an oil field is acquired or when the Group starts to utilise these and as a counterpart to the provision an asset is recorded as one part of the Group s total oil and gas properties. The asset is depreciated over the life of the oil field based on the oil field s production. Income tax Income tax consists of current tax and deferred tax. Income taxes are recorded in the income statement when they refer to income statement items. Income taxes referring to items in other comprehensive income are recorded in total other comprehensive income and recorded directly against equity when the underlying transaction is recorded directly against equity. Current tax Current tax is tax that is to be paid or received for the current year, applying the tax rates and the tax legislation used and in force on the balance sheet date. This includes adjustment of current tax attributable to previous periods. Current tax receivables and liabilities for current and prior periods are valued at the amount expected to be recovered from or paid to the tax authorities. Taxes on oil production are paid in accordance with local legal and fiscal terms in each country and these terms can vary within each country depending on which oil field they relate to. The tax is calculated on taxable profit for each individual oil field at the current local tax rates. Current tax receivables and liabilities attributable to each company are reported net in the balance sheet. Under the valid licence terms of certain producing oil fields, tax must be paid in the form of tax oil. The Group pays tax oil in kind through the delivery of oil. Payment of tax oil is recognised gross in the income statement where total revenue includes the number of barrels of tax oil produced and a corresponding expense is recognised in the income statement item Income tax. Deferred tax Deferred tax is calculated based on temporary differences between the fiscal and book values of assets and liabilities. Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will exist against which the deductible temporary differences and the carry-forward of unused tax losses can be utilised. However, if the deferred income tax arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not recognised. The recorded values of deferred tax assets are tested as of each balance sheet date and reduced if there is no longer a probability that there will be sufficient taxable profit to utilise the deferred tax assets against. Deferred tax assets and liabilities are measured at tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or exist in practice at the balance sheet date. Deferred tax assets and liabilities are reported net in the balance sheet provided that the tax payment will be made at the net amount. Leasing as lessee The Group s lease agreements where all risks and benefits associated with the ownership do not accrue to the Group are classified as operating leases. The Group has only assets that are reported as operating leases. Lease payments are recorded as costs in the income statement and are distributed linearly over the term of the agreement. Also see Note 12 Leasing. Cash flow statement The cash flow statement shows cash receipts and cash payments and the indirect method has been used. In addition to cash and bank balances, short-term deposits with an original term of less than three months are classified as cash and cash equivalents, exposed to insignificant in fluctuations in value. Contingent liabilities A contingent liability is recognised when there is a possible obligation relating topast events, the existence of which is confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the enterprise, or when there is an obligation which is not recognised as a liability or a provision because it is unlikely that an outflow of resources will be required to settle the obligation. Parent Company s accounting principles The Swedish Financial Reporting Board s recommendation RFR 2, Accounting for Legal Entities, was applied in the preparation of the Parent Company s financial statements. With the exception of those cases stated below, the Parent Company applies the same accounting principles as the Group. In the Parent Company, shares in subsidiaries are reported at acquisition value with a deduction for possible impairment losses. Also in the Parent Company, shareholders contributions to subsidiaries are recorded as an increase in the value of the shares in the subsidiary on the grounds of increased value within the subsidiary. These shareholders contributions are eliminated against the subsidiaries equity in the consolidated financial statements. Note 2.2 Changes in accounting principles and disclosures The same accounting principles have been applied in this Annual Report as in the Annual Report for the financial year 2011. During the year the Group did not apply in advance any new or amended standards and interpretations from IFRIC adopted by the EU. The new and amended standards and statements that were adopted by the EU, and which entered force in 2012, were taken into consideration. Note 2.3 Standards, amendments and interpretations that were adopted by the EU and which entered force in 2012. Only those standards, amendments and interpretations that were adopted by the EU and which entered force during the year that are assessed as relevant for and which have been taken into consideration by PA Resources are commented on below. IFRS 7, Financial Instruments: Disclosures Amendment The amendment will be applied for financial years that start on 1 July 2011 or later. The amendment means that additional quantitative and qualitative disclosures are necessary when financial items are derecognised from the balance sheet. In addition, disclosure is required if an asset is not derecognised in its entirety. Furthermore, any continuing involvement in the asset on the part of the company must also be disclosed. No comparative information needs to be disclosed for the periods preceding implementation of the amendment. Note 2.3.1 Standards, amendments and interpretations which have not yet entered into force and have not been applied in advance by the Group, but which have been adopted by the EU The comments below apply only to the standards, amendments and interpretations that have not yet entered into force, but which have been adopted by the EU and are deemed to be relevant to and may have an effect on PA Resources future financial reports. IFRS 7, Financial Instruments: Disclosures Amendment The amendment will be applied for financial years that start on 1 January 2013 or later. The amendment means new disclosure requirements regarding the offsetting of financial assets and liabilities in the statement of financial position. Disclosures must also be made for financial assets and liabilities that are governed by various types of framework agreements or similar agreements that allow netting (master netting agreements), irrespective of whether they have been offset or not. The amendment is applied retroactively in accordance with IAS 8. The Group will apply the standard from 1 January 2013 and the preliminary assessment is that the effects from the implementation are limited to additional disclosures regarding the offsetting of deferred tax assets and deferred tax liabilities. IFRS 9, Financial Instruments: Recognition and Measurement (As yet, not adopted by the EU and no timetable for approval has been established at present) IFRS 9 will, in all likelihood be applied for financial years beginning on or after 1 January 2015. The standard implies a reduction in the number of valuation categories for financial assets and means that the main category for recognition of accrued cost and fair value will be through profit or loss. Pending the adoption of all the parts of the standard the Group has yet to evaluate the impact of an implementation of the standard. 52 PA RESOURCES ANNUAL REPORT 2012

Financial reports notes IFRS, 10 Consolidated Financial Statements replaces parts of IAS 27, Consolidated and Separate Financial Statements. IFRS 10 is effective for financial years that start on or after 1 January 2014. Standard is to be applied retroactively in line with IAS 8 with certain modifications. The Group will apply the standard from 1 January 2014, but this is not expected to impact the financial statements of the Group or Parent Company. IFRS 11, Joint Arrangements and IAS 28, Investments in Associates and Joint ventures This will be applied to for financial years that start 1 January 2014 or later. IFRS 11 deals with the accounting for joint arrangements that are defined as contractual arrangements where two or more parties have joint control. IFRS 11 supersedes IAS 31 Interests in Joint Ventures and SIC 13 Jointly Controlled Entities - Non-Monetary Contributions by Venturers. The standard will be applied with a modified retroactive effect. The Group will apply the standard from 1 January 2013. IAS 28 are essentially similar to previous IAS 28 and shall apply to financial years beginning on or after 1 January 2013. The preliminary assessment is that the implementation will not impact the Group s financial statements. IFRS 12 Disclosures of Interest in Other Entities This will be applied for financial years that start 1 January 2014 or later. The standard applies to companies that own shares in subsidiaries, associates, joint arrangements and unconsolidated structured entities and entails disclosure requirements aimed at providing the users of financial statements with increased understanding of these holdings and the reporting pertaining to them. The disclosure requirements are more extensive than those previously required and of a significant qualitative and quantitative nature. The Group is waiting for adoption of all parts of the standard before evaluating the effects of implementation. IFRS 13 Fair Value Measurement The standard will be applied for financial years that start 1 January 2013 or later. The standard applies to the term, fair value, and means new disclosures in the Annual Report and Interim reports. IFRS 13 describes how fair value should be measured and requires disclosures about fair value measurement aimed at clarification of the valuation techniques used, the inputs used in these techniques and the effects arising from these valuations in the income statement. The standard will be applied moving forward. The preliminary assessment is that the standard may entail increased disclosures for the Group pertaining to the valuation of oil and gas resources. IAS 1 Presentation of Financial Statements - amendment: Presentation of Other Comprehensive Income The amendment will be applied for financial years that start 1 July 2012 or later and means changes to the grouping of transactions that appear under other comprehensive income. Separate presentation is required for items that are reclassified subsequently to profit or loss from those items that are not reclassified. Accordingly, the amendment applies only to the format used for presentation. The amendment is to be applied retroactively in line with IAS 8. The Annual Accounts Act Amendments to the Annual Accounts Act may have an effect of the Parent Company s financial statements. In 2012, Chapter 4 Section 14 points f and g were repealed, which means that tangible and intangible assets can no longer be valued at fair value. The amendment has no impact of the financial statements of the Parent Company. Note 2.4 Critical accounting principles, estimates and assumptions In the course of preparing the financial statements, the management of PA Resources has to make estimates and assumptions that will affect recorded asset and liability items as well as revenue and expense items. Uncertainties in estimates and assumptions could have an effect on reported values of assets, liabilities and consolidated results. Estimates and assumptions are reviewed regularly on the basis of historical experience and other factors, including expectations of future events. The main estimates and assumptions are shown below: Estimates and assumptions of oil and gas reserves Accounting for oil and gas discoveries is subject to accounting rules that are unique to the oil and gas industry. The accounting principles and areas which require the most significant estimates and assumptions when preparing the consolidated financial statements relate to oil and natural gas accounting, including estimates of and assumptions concerning reserves. The valuation of oil and gas properties is based on estimates and assumptions concerning both proven and probable oil reserves at the time of acquisition of the oil fields and the expected oil that can be produced yearly. Estimates and assumptions of proven and probable oil reserves are performed with the aid of third party valuations and reserves are adjusted annually in the light of the volume of oil and gas produced as well as new discoveries made during the year. However, there is always a certain amount of uncertainty surrounding the valuations performed, and should there be any new estimates and assumptions showing a decrease in oil reserves or if the oil production does not encounter potentially economically profitable oil and gas quantities there is a significant risk that the recorded oil and gas properties for specific wells will have to be impaired. This is assessed in impairment testing. The results of third-party appraisals are analysed and an assessment performed of any discrepancies identified between estimated proven and probable oil and gas reserves compared with Group internal appraisals. Assessments are performed by the management in respect of how the appraisals are utilised. Impairment testing of exploration and evaluation assets as well as oil and gas properties During impairment testing of recorded exploration and evaluation assets as well as oil and gas properties an estimate of the value in use is required for the cash generating units. When calculating present value an estimate is required of the cash generating units future cash flows as well as the discount rate to be applied for calculating present value. When assessing impairment the management has to decide the method to be used to establish values in use, what underlying variables should affect the method of calculating the values in use and whether there are different risks in the cash generating units. The management must therefore assess whether different discount factors should be used when calculating values in use. For information on the reported values of total exploration and evaluation assets as well as oil and gas properties on the balance sheet date refer to Note 16 Exploration and evaluation assets as well as oil and gas properties and Note 18 Impairment testing of exploration and evaluation assets as well as oil and gas properties. Estimation of and assumptions concerning taxes In order to determine current tax receivables and liabilities and capitalisation of provisions for deferred tax assets and liabilities, significant estimates and assumptions have to be made by the management. This process includes analyzing the tax result of each of the legal entities in which PA Resources conducts its business. The process includes analysing exposure to current tax and establishing temporary differences that arise because certain assets and liabilities are valued in different ways in the financial statements and in the income declarations. The management also has to assess the probability that deferred tax assets can be realised against future taxable revenues as well as repayments of accrued exploration expenses. The actual outcome could differ from these assessments, for example depending on future changes in business conditions and investment decisions, currently unknown changes in fiscal legislation or as a result of the final examination by tax authorities or courts of law of tax declarations submitted. For information on the reported values of total current tax and total deferred tax receivables and tax liabilities on the balance sheet date refer to Note 14 Income tax. Estimation of and assumptions concerning provisions for asset retirement obligations Provisions for asset retirement obligations are based on estimates of expected future obligations and requirements relating to dismantling, removal, clean-up and similar actions around the drilling sites on the oil fields. The estimates are based on legal requirements from the authorities, estimated close-down expenses from operators in oil fields where the Group merely owns shares as well as the management s own assessments concerning future close-down where the Group is operator. Actual future cash outflow may differ from the provisions for asset retirement obligations due to changes in these factors. In order to take any changes into account the recorded values of the provisions for asset retirement obligations are reviewed regularly. When calculating the provisions for future asset retirement obligations the management must make assessments concerning future investments and development on the oil fields, any changes in the requirements of the local authorities concerning asset retirement obligations as well as other factors which may significantly affect the provision. For more information on the values reported for total asset retirement obligations per balance sheet date refer to Note 24 Provisions. Note 2.5 Significant judgments in the application of the Group s accounting principles Subsidiaries assets and liabilities in foreign currencies as at the balance sheet date are translated from the functional currency of the unit concerned into the Group s reporting currency (SEK). The company assesses annually whether the subsidiaries functional currency is affected by any changes in the local economic environments in which the subsidiaries conduct their business. During the current financial year, none of PA Resources units changed its functional currency. PA RESOURCES ANNUAL REPORT 2012 53

Financial reports notes Note 3 Acquisitions of operations and license shares During the 2012 and 2011 financial years no acquisitions or divestments have been made of companies or shares in companies. In 2011, the operations were discontinued of three dormant companies through voluntary liquidation: PA Resources Arctic ApS, PA Resources Nuna ApS and PA Resources Greenland ApS. In 2012, PA Resources was preliminarily awarded Block 22/19a in the UK; PA Resources will be the operator for the licence with an ownership share of 50%. During the year, the Group has relinquished the following licences: 9/95 ( Maja ) in Denmark, Marine XIV in the Republic of Congo (Brazzaville) and P 1342 in the UK. In the middle of January 2013, licence P 1802 was relinquished, the impairment charge for which was as for the other relinquished licences recognised in 2012. In addition, PA Resources has reduced its share in the B20008/73 offshore licence in Germany by 10% to the current level of 90%. In 2011, PA Resources was awarded 100% ownership and operatorship in the above licence in Germany and relinquished the P 1529 offshore licence in the UK. At 1 January 2012, PA Resources signed an agreement pertaining to the divestment of its shares in the two oil-producing fields Ezzaouia and El Bibane; the transaction was completed during the second quarter of 2012. Note 4 Revenue Group revenue primarily refers to sales of oil and gas, but also to consulting services provided to external clients. Most of the Parent Company s revenue refers to sale of services to other Group companies. Group Parent company SEK 000s Jan.-Dec. 2012 Jan.-Dec. 2011 Jan.-Dec. 2012 Jan.-Dec. 2011 "Working interest" production 2,164,220 2,123,414 - - Revenue, internal - - 27,960 26,261 Other revenue 19,307 30,394 168 39 Total revenue 2,183,527 2,153,808 28,128 26,300 Note 5 Cost of sales The Parent company has no expenses classified as cost of sales. Group SEK 000s Jan.-Dec. 2012 Jan.-Dec. 2011 Operation costs 330,789 342,843 Operating rental costs 154,790 67,743 Maintenance costs 5,732 6,659 Royalties 255,243 276,818 Other costs 3,855 13,338 Total cost of sales 750,409 707,401 Note 6 Segment information The Group is organised and followed up according to geographic regions, which correspond to the operating segments for which information is provided. Operating segments per geographic region correspond to the reporting for local units within the respective regions, except for working interests in PA Resources AB, which are reported in the North Sea segment. Following is a compilation of operating segments per geographic region and the local reporting entities that are included within the respective reportable oper ating segments: North Africa: Hydrocarbures Tunisie Corp, Hydrocarbures Tunisie El Bibane Ltd, PA Resources Tunisia. West Africa: PA Energy Congo Ltd, Osborne Resources Ltd. North Sea: PA Resources UK Ltd, PA Resources Denmark ApS and PA Resources AB s working interests in Greenland. Other/joint- Group: PA Resources AB, Microdrill AB and joint-group The operating segments are accounted for according to the same accounting policies as for the Group. The operating segments revenue, expenses, assets and liabilities include items directly attributable to and items that can be allocated to a specific operating segment in a reasonable and reliable manner. The Group centralises its handling of financial assets and liabilities. As a result of this, financial items and financial assets and liabilities are reported as joint-group items. Externally reported revenue for all operating segments except for Other pertains to sales of oil and services related to exploration and production of oil and gas. Group management (the CODM) follows up the profit/loss measure Operating profit. The column Other/Group includes in addition to the companies listed above also Joint-Group transactions. January - December 2012 Income Statement (SEK 000s) North Africa West Africa North Sea Other/Group Group elimination Revenue 625,202 1,553,810 16,111 28,128-39,724 2,183,527 Total expenses -247,126-633,128-40,160-47,402 39,724-928,092 Impairment losses - -1,639,586-108,088 - - -1,747,674 Depreciation and amortisation -317,942-253,433 - -95 - -571,470 Operating profit 60,134-972,337-132,137-19,369 0-1,063,709 Total financial items -599,317 Profit before tax -1,663,026 Income tax -302,719 Profit for the year -1,965,745 Total January - December 2011 Income Statement (SEK 000s) North Africa West Africa North Sea Other/Group Group elimination Revenue 856,654 1,292,065 5,050 26,300-26,261 2,153,808 Total expenses -282,906-564,820-9,172-27,921 26,261-858,558 Impairment losses -598,962-1,435,704-541 - - -2,035,207 Depreciation and amortisation -407,868-376,651-1,989-144 - -786,652 Operating profit -433,082-1,085,110-6,652-1,765 0-1,526,609 Total financial items -350,347 Profit before tax -1,876,956 Income tax -206,940 Profit for the year -2,083,896 Total 54 PA RESOURCES ANNUAL REPORT 2012

Financial reports notes Cont. Note 6 31 December 2012 Balance sheet (SEK 000s) North Africa West Africa North Sea Other/ Group Group elimination Exploration and evaluation assets 1,734,217 1,000,275 663,789 - - 3,398,281 Oil- and gas properties 1,606,390 519,580 - - - 2,125,970 Machinery and equipment 4,333-42 - - 4,381 Financial assets 1,029 26-2,190,823-2,190,823 1,055 Deferred tax receivables - - - 103,412-103,412 Current assets 193,484 462,601 16,766 132,646-805,497 Total assets 3,539,453 1,982,482 680,597 2,426,887-2,190,823 6,438,596 Total Equity 1,590,257 Non-current liabilities 1,067,842 266,976-399,832-1,734,650 Current liabilities 345,171 298,869 30,705 2,438,944-3,113,689 Total equity and liabilities 1,413,013 565,845 30,705 2,838,776 0 6,438,596 Investments in exploration and evaluation assets 5,536 14,100 28,521 - - 48,157 Investments in oil- and gas properties - 206,785 - - - 206,785 Investments in machinery and equipment 75 - - - - 75 31 December 2011 Balance sheet (SEK 000s) North Africa West Africa North Sea Other/ Group Group elimination Exploration and evaluation assets 1,833,756 1,635,855 756,368 - - 4,225,979 Oil- and gas properties 2,005,974 1,661,339 - - - 3,667,313 Machinery and equipment 7,152 6,633 1,612 102-15,499 Financial assets 1,191 291-2,190,812-2,190,812 1,482 Current assets 304,080 633,311 12,140 31,961-981,492 Total assets 4,152,153 3,937,429 770,120 2,222,875-2,190,812 8,891,765 Total Equity 2,816,320 Non-current liabilities 1,173,155 107,673-3,203,067-4,483,895 Current liabilities 399,235 116,964 61,028 1,014,323-1,591,550 Total equity and liabilities 1,572,390 224,637 61,028 4,217,390 0 8,891,765 Investments in exploration and evaluation assets 58,678 168,189 346,420 - - 573,287 Investments in oil- and gas properties 425,372 607,044 - - - 1,032,416 Investments in machinery and equipment 2,326 4,554 31 - - 6,911 Allocation of book values by region (exploration and evaluation as well as oil and gas properties) 12% 28% 60% North Africa West Africa North Sea PA RESOURCES ANNUAL REPORT 2012 55

Financial reports notes Cont. Note 6 The Group s customers consist of a small number of major international oil and trading companies. Information on external revenue pertaining to the region where the operating segments are registered and outside the region is provided below. The table also shows revenue from individual external customers where the revenue amounts to 10% or more compared with total external revenue for the Group. January - December 2012 SEK 000s North Africa West Africa North Sea Other/Group Group elimination Revenues from external customers within the region 133,900 95 16,111 28,128-39,724 138,510 Revenues from external customers outside the region 491,302 1,553,715 - - - 2,045,017 Total revenues, external 625,202 1,553,810 16,111 28,128-39,724 2,183,527 Total Revenues from external customers exceeding 10% of total Group revenue Customer 1 407,986 406,307 - - - 814,293 Customer 2-859,326 - - - 859,326 Percentage of revenues from external customers exceeding 10% of total Group revenue Customer 1 19% 19% - - - 38% Customer 2-39% - - - 39% January - December 2011 SEK 000s North Africa West Africa North Sea Other/Group Group elimination Revenues from external customers within the region 293,753-5,050 26,300-26,261 298,842 Revenues from external customers outside the region 562,901 1,292,065 - - - 1,854,966 Total revenues, external 856,654 1,292,065 5,050 26,300-26,261 2,153,808 Total Revenues from external customers exceeding 10% of total Group revenue Customer 1 546,504 - - - - 546,504 Customer 2 310,150 - - - - 310,150 Customer 3-293,365 - - - 293,365 Customer 4-290,505 - - - 290,505 Percentage of revenues from external customers exceeding 10% of total Group revenue Customer 1 25% - - - - 25% Customer 2 14% - - - - 14% Customer 3-14% - - - 14% Customer 4-13% - - - 13% 56 PA RESOURCES ANNUAL REPORT 2012

Financial reports notes Note 7 Employees, salaries and other remuneration Jan.-Dec. 2012 Jan.-Dec. 2011 Average number of employees Of which men in percent Average number of employees Of which men in percent Parent company 8 66 9 67 Subsidiaries 124 83 124 83 Group Total 132 82 133 82 Of which Sweden 8 66 9 67 Of which Republic of Congo 0 0 1 100 Of which United Kingdom 11 73 11 73 Of which Tunisia 113 95 112 84 Group Total 132 82 133 82 Allocation of employees per country Sweden United Kingdom Tunisia 86% 6% 8% Average number of persons broken down for Board of Directors and senior executives Jan.-Dec. 2012 Jan.-Dec. 2011 Number Of which men in % Number Of which men in % Parent company Board of Directors 5 80 5 80 Group management 2 100 2 100 Group Total Board of Directors 5 80 5 80 Group management 2 100 2 100 Salaries, remuneration, social contributions and pension costs SEK 000s Salaries and other remuneration Jan.-Dec. 2012 Jan.-Dec. 2011 Social security contributions Of which pension costs Salaries and other remuneration Social security contributions Of which pension costs Sweden (Parent company) 13,643 6,335 1,596 13,751 6,536 1,788 Subsidiaries 34,315 6,329 2,243 29,970 6,455 1,687 Group Total 47,958 12,664 3,839 43,721 12,991 3,475 Total salaries and other remunerations include salaries, director fees and other remuneration. PA Resources only has defined-contribution pension plans. Salaries and other remuneration broken down for Board of Directors, senior executives and other personnel. Jan.-Dec. 2012 Jan.-Dec. 2011 SEK 000s Board of Directors Group Management Other personnel Board of Directors Group Management Other personnel Sweden (Parent company) 1,833 6,362 5,448 1,444 6,680 5,627 Subsidiaries - - 34,315 - - 29,970 Group Total 1,833 6,362 39,763 1,444 6,680 35,597 Bonus programme Taking into consideration the share-price trend and the refinancing completed in the fourth quarter of 2012, the Board decided to cancel the bonus system implemented in 2011. Accordingly, the company has no obligations attributable to the bonus system from 2011. Only a small number of individuals, of which none are senior executives, are still included under the portion of the old bonus system from 2008 pertaining to the so-called stay-on bonus. The share-price related bonus portion is no longer relevant. The remaining stay-on bonus portion provides an entitlement to bonus salary corresponding to a maximum of three to six months salary depending on the employee category and with the prerequisite that the employee remain in the employ of PA Resources for the duration of the qualification period and the payment period. The cost of the bonus programme is accrued as incurred. PA RESOURCES ANNUAL REPORT 2012 57

Financial reports notes Note 8 Remuneration and other benefits; Board of Directors and senior executives of the Parent Company Jan.-Dec. 2012 SEK 000s Salary/ Director fees Remunerations Other benefits Pension costs Other remunerations Hans Kristian Rød ( Chairman of the Board) 550 - - - 83 633 Lars Olof Nilsson (Board member) 275 - - - 100 375 Paul Waern (Board member) 275 - - - - 275 Catharina Nystedt-Ringborg (Board member) 275 - - - - 275 Per Jacobsson (Board member) 275 - - - - 275 Group Management (2 pers) 5,237 300 244 881-6,662 Total Jan.-Dec. 2011 SEK 000s Salary/ Director fees Remunerations Other benefits Pension costs Other remunerations Hans Kristian Rød (Chairman of the Board) 344 - - - 115 459 Lars Olof Nilsson (Board member) 241 - - - 1 242 Paul Waern (Board member) 241 - - - 1 242 Catharina Nystedt-Ringborg (Board member) 241 - - - 97 338 Per Jacobsson (Board member) 103 - - - 4 107 Sven Rasmusson (prior Chairman of the Board) 275 - - - - 275 Group Management (2 pers) 5,221 928 258 856-7,263 Total The President of PA Resources AB receives a fixed remuneration plus the benefit of a company car excluding fuel. During 2012, salary and other benefits were paid out in an amount of SEK 3,412 (3,403) thousand and SEK 164 (173) thousand respectively. The President is entitled to an annual performance-based variable remuneration based on meeting individually set targets of a maximum of three months salary. During the financial year 2012 performance-based variable remuneration in an amount of SEK 0 (605) thousand was paid out to the President. Pension costs amounted to SEK 440 (428) thousand during 2012. The period of notice applicable to the President is twelve months on the part of the company and six months on the part of the employee. There are no agreements on severance pay or other compensation for the President or the Board members within the Parent Company or Group. For the President there is a sever ance pay agreement providing for a maximum of six months salary in the event of a change in the majority ownership of the Group. There are no agreements on other forms of bonuses or comparable remuneration for the President or the Board members. The preceding President and CEO of the Group and Parent Company received total remuneration of SEK 0 (498) thousand during the financial year. The Group has no commitments in respect of loans, pledged assets or other guarantees for the benefit of the Presidents or Board members of the Parent Company or Group. At the Annual General Meeting on 22 May 2012 it was decided that a maximum amount of SEK 1,650 thousand (unchanged compared to preceding year) shall be paid out as directors fees and distributed to members of the Board who are not employed by and do not hold any other position in the Parent Company or any Group company. The table above shows the remuneration and other benefits expensed during the year to the Chairman of the Board and to each Board member. From and including the 2012 Annual General Meeting, payment is made quarterly in conjunction with publication of the financial reports. Other remuneration paid in 2012 was attributable to travel allowances paid in conjunction with the performance of Board work and a nonrecurring amount of SEK 100 thousand for one Board member pertaining to work performed in conjunction with the company s refinancing in the fourth quarter. See page 35 for further information regarding guidelines for remuneration. Note 9 Share-based incentive schemes At the end of 2012, there were no share-related incentive programmes in place that could result in issue of new shares or any other financial instruments. Note 10 Other external expenses Group Parent company SEK 000s Jan.-Dec. 2012 Jan.-Dec. 2011 Jan.-Dec. 2012 Jan.-Dec. 2011 Consultant fees 28,448 20,441 17,955 13,594 Office related expenses 15,003 17,074 4,281 4,054 Travel expenses 1,837 4,381 1,205 2,023 License related expenses 52,536 40,268 - - Activated work - own account -19,857-19,738-1,718 - Intragroup expenses - - 10,598 - Other 32,892 22,631 172 171 Total other external expenses 110,859 85,057 32,493 19,842 58 PA RESOURCES ANNUAL REPORT 2012

Financial reports notes Note 11 Remunerations to auditors Group Parent company SEK 000s Jan.-Dec. 2012 Jan.-Dec. 2011 Jan.-Dec. 2012 Jan.-Dec. 2011 Ernst & Young AB, audit pertaining to audit engagement 3,919 2,676 2,825 1,983 Ernst & Young, tax consultancy 366 409 - - Ernst & Young AB, other services 613 194 431 194 PricewaterhouseCoopers, other services 1,180 455 - - Chantrey Vellacott, audit pertaining to audit engagement 204 156 - - Chantrey Vellacott, other services 11 10 - - BDO LLP, other services 107 - - - Total 6,400 3,900 3,256 2,177 Note 12 Leasing The Group s lease agreements where all risks and benefits associated with the ownership do not accrue to the Group are classified as operating leases. All the Group s leased assets during the year are classified as operating leases. The Group utilises premises, garages, company cars, computers and machinery Operating leases, SEK 000s Premises 2012 Production related Other Total Maturity year 2013 4,129 32,936 537 37,602 Maturity year 2014-2017 4,579 3,232 198 8,009 Maturity year 2018 and after - 808-808 through operating lease agreements. Leasing costs amounted to SEK 44.1 million (42.2) for the 2012 financial year. Future payment commitments for lease agreements within the Group are stated in the table below: Operating leases, SEK 000s Premises 2011 Production related Other Total Maturity year 2012 5,772 37,505 503 43,780 Maturity year 2013-2016 3,620 35,898 395 39,913 Maturity year 2017 and after - - - - Note 13 Financial income and expenses Exchange gains and losses are reported net in the income statement for the Group and Parent Company. SEK 000s Group Parent company Jan.-Dec. 2012 Jan.-Dec. 2011 Jan.-Dec. 2012 Jan.-Dec. 2011 Interest income 5,503 19,043 100,559 278,387 Exchange gains - 16,688-173,054 Other financial items - 27,964 1,224 28,075 Total financial income 5,503 63,695 101,783 479,516 Interest expense -380,354-291,077-369,167-408,653 Exchange losses -1,021 - -361,862 - Other financial items -223,445-122,965-137,912-60,458 Total financial expenses -604,820-414,042-868,941-469,111 Exchange gains/losses are broken down as follows; Exchange gains arising from bank equivalents (gross) 6,043 24,595 4,342 20,677 Exchange gains arising from borrowings (gross) 116,099 95,634 1,263,769 1,976,718 Exchange losses arising from bank equivalents (gross) -6,425-24,226-6,398-18,360 Exchange losses arising from borrowings (gross) -116,738-79,315-1,623,575-1,805,981 Total exchange gains (+) / losses (-) (net) -1,021 16,688-361,862 173,054 Of the year s total financial income in the Parent Company, SEK 1,247,469 thousand (2,156,710) refers to income from Group companies. Of the year s total financial expenses in the Parent Company, SEK 1,548,806 thousand (1,800,310) refers to expenses from Group companies. PA RESOURCES ANNUAL REPORT 2012 59

Financial reports notes Note 14 Income tax Tax expenses for the years 2012 and 2011 relate to the components reported in the tables below. The tables also state deferred tax assets and liabilities as at 31 December 2012 and 2011. The Group operates in a number of countries and tax systems that have different corporation tax rates to those in Sweden. The corporation tax rates within the Group vary between 26 percent and 75 percent. Group Parent company Current income tax (SEK 000s) Jan.-Dec. 2012 Jan.-Dec. 2011 Jan.-Dec. 2012 Jan.-Dec. 2011 Current income tax relating to: Current income tax Current income tax for the year -385,093-397,663 - - Adjustment of income tax for preceding year - 66,918 - - -385,093-330,745 - - Deferred income tax Origin and reversal of temporary differences 99,500 166,816 31,421 12,116 Adjustment of deferred income tax for preceding year -17,126-43,011 104,872 - Total income tax reported in the income statement -302,719-206,940 136,293 12,116 The income tax charge/revenue for the years 2012 and 2011 can be reconciled against profit/loss before tax multiplied by current income tax rate as follows: Group Parent company Reconciliation of effective income tax Jan.-Dec. 2012 Jan.-Dec. 2011 Jan.-Dec. 2012 Jan.-Dec. 2011 Profit before tax -1,663,026-1,876,956-827,619-1,464,072 Adjustment for income taxed on basis other 1,672,277 902,191 - - Profit before tax where taxation is based on net profit 9,251-974,765-827,619-1,464,072 Income tax expense according to applicable tax rate 26.3 percent (26,3 percent) in Sweden -2,433 256,363 217,664 385,051 Adjustment for tax conditions and tax rates in other countries -9,255-119,405 - - Non-deductible income statement items tax effect -59,369-174,445-512,671-384,459 Non-taxable income statement items 20,803 35,208 498,798 1 Tax effect on impairment losses - 276,589 - - Temporary differences and deficiencies for which deferred income tax has not been accounted for -42,356-5,397-93,911 27,920 Tax effect of non-booked revenue -78,843-147,199-78,743-16,397 Tax effect on tax losses carryforward - not recognised previously 125,370-125,370 - Effect due to change in tax rate -20,213 - -20,213 - Adjustment of income tax for preceding year -17,126-43,011 - - Other -52,624 - - - Reported tax based on the results where taxation is based on net profit -136,045 78,703 136,293 12,116 Income tax paid on a basis other then the reported result -166,674-285,643 - - Total income tax -302,719-206,940 136,293 12,116 60 PA RESOURCES ANNUAL REPORT 2012

Financial reports notes Cont. Note 14 Deferred tax liabilities (net) (SEK 000s) 31 Dec. 2012 Group balance sheet 31 Dec. 2011 1 Jan. 2011 *Restated Group income statement Jan.-Dec. 2012 Jan.-Dec. 2011 Parent company balance sheet 31 Dec. 2012 31 Dec. 2011 Parent company income statement Jan.-Dec. 2012 Jan.-Dec. 2011 Deferred tax pertaining to participating interests in oil fields 722,451 683,788 742,531-33,268-181,487 - - - - Deferred tax pertaining to oil sales -21,580 25,582 32,900 5,884 16,587 - - - - Deferred tax pertaining to impairment losses - 32,881 33,339-276,589 - - - - Deferred tax pertaining to convertible bond 1,459-44,996 31,221 12,116 1,459 32,881 31,221 12,116 Deferred tax on other temporary differences -104,872-3 78,537 - -104,872-105,072 - Total deferred tax liabilities (net) 597,458 742,251 853,769 0 0-103,413 32,881 136,293 12,116 Deferred income tax 82,374 123,805 136,293 12,116 * Restatement of opening balance In connection with the process of farming out ownership interests in the Zarat license in Tunisia, PA Resources conducted an analysis of the Tunisian tax situation. This resulted in an adjustment of previously unreported deferred tax liabilities pertaining to periods before 2011 by a total of SEK -444,738 thousand, which was reported directly against shareholders equity for the period in 2011. Group Parent company Tax items recorded directly in equity 31 Dec. 2012 31 Dec. 2011 31 Dec. 2012 31 Dec. 2011 Deferred tax on other temporary differences - 2-2 Total 0 2 0 2 Accumulated losses carried forward in the Group amounted to SEK 1,119,034,000 (476,690,248). The accumulated losses carried forward in the Parent Company can be offset against future taxable earnings and results in deferred tax recoverable of SEK 180,767,000 (125,369,535). The accumulated losses carried forward in the Parent Company are effective for the foreseeable future. During the year, deferred tax assets were recorded in the Parent Company s balance sheet on the basis of the renewed testing pertaining to the convincing advantages of accumulated deficits and probable future earnings. Note 15 Earnings per share 2012 2011 Earnings per share before dilution (SEK) -2.36-3.27 Profit for the year -1,965,745-2,083,896 Profit for the year attributable to equity holders of the parent company -1,965,745-2,083,896 Weighted average number of ordinary shares during the year 832,034,544 637,476,105 Earnings per share before dilution (SEK) -2.36-3.27 Earnings per share before dilution are calculated by dividing profit for the year attributable to ordinary shareholders of the Parent Company by the weighted average number of ordinary shares outstanding during the year. The calculations for earnings per share after dilution only include those shares that give rise to a dilution effect. A potential dilution effect exists in the convertible bonds outstanding. On calculation of the potential dilution effect for 2012 and 2011, this would have resulted in a positive impact on earnings per share. The applicable accounting policies (IAS 33) do not allow inclusion of a positive effect. The earnings per share are thus reported after dilution excluding the dilutive effect of convertible bonds outstanding. Bearing this limitation in mind, earnings per share after dilution corresponds to earnings per share before dilution. PA RESOURCES ANNUAL REPORT 2012 61

Financial reports notes Note 16 Exploration- and evaluation assets and Oil- and gas properties SEK 000s Exploration and evaluation assets Group Oil and gas properties Parent company Exploration and evaluation assets At 1 January 2011 3,480,048 7,552,721 - Intra-Group re-structure - - 83,305 Investments 573,287 945,663 4,777 Capitalized borrowing costs - 86,753 - Revaluation asset retirement obligations - 101,774 - Disposals -12,225-243,745 - Reclassifications -312 - - Exchange rate differences 45,907 173,207 - At 31 December 2011 4,086,705 8,616,373 88,082 Investments 48,157 206,785 3,461 Revaluation asset retirement obligations - 15,553 - Disposals -183,536 - - Reclassifications 6,424 20,194 - Exchange rate differences -220,814-537,067 - At 31 December 2012 3,736,936 8,321,838 91,543 Depreciation, amortisation and impairment At 1 January 2011-36,314-2,064,697 - Depreciation charge for the year - -780,881 - Impairment for the year -541-2,034,666 - Disposals 12,483 45,751 - Reclassifications 162,770-162,770 - Exchange rate differences 876 48,203 - At 31 December 2011 139,274-4,949,060 - Depreciation charge for the year - -568,997 - Impairment for the year -693,980-1,046,684 - Disposals 188,619 - - Reclassifications 2,839 - - Exchange rate differences 24,593 368,873 - At 31 December 2012-338,655-6,195,868 0 Net book value: At 31 December 2011 4,225,979 3,667,313 88,082 At 31 December 2012 3,398,281 2,125,970 91,543 Of the year s impairment loss in exploration and evaluation assets of SEK 694 million, SEK 281 million was attributable to impairment of the relinquished licences: 9/95 ( Maja ) in Denmark, P 1342 and P 1802 in the UK as well as Marine XIV in the Republic of Congo. In addition, an impairment charge of SEK 413 million was attributable to licence MPS in the Republic of Congo as a consequence of the revision of the volume of future recoverable reserves. The preceding year s impairment loss of SEK 1 million was attributable to the relinquishment of a licence in the UK. The year s impairment loss in oil and gas properties of SEK 1,047 million was attributable entirely to the Azurite field, where SEK 896 million pertained to impairment performed in the third quarter as a consequence of the revision of the volume of future recoverable reserves and SEK 151 million to the additional investment costs which were expensed in the fourth quarter. The preceding year s impairment loss of SEK 2,035 million was attributable to impairment of working interests in North Africa of SEK 599 million pertaining to the failure of the production well at Didon North and the impairment down to net realisable value of the divested fields Ezzaouia and El Bibane. The sum also included the impairment of licences in West Africa of SEK 1,436 million, which were attributable to working interests in the Azurite field in the Republic of Congo. For more information, see Note 18 Impairment testing of exploration and evaluation assets as well as oil and gas properties. Of the above assets, SEK 726,489 thousand (1,347,210) has been pledged as collateral for external financing refer to Note 28 Pledged assets and contingent liabilities. During the year, borrowing costs amounting to SEK 0 thousand (86,753) were capitalized. The average interest rate used in the preceding year for this purpose was about 7 percent. The Parent Company has no oil and gas properties. 62 PA RESOURCES ANNUAL REPORT 2012

Financial reports notes Note 17 Machinery and equipment SEK 000s Group Machinery and equipment Parent company Machinery and equipment At 1 January 2011 44,720 1,036 Investments 6,911 - Disposals -111 - Reclassifications -4,604 - Exchange rate differences 1,201 - At 31 December 2011 48,117 1,036 Investments 75 - Disposals -6,275-174 Exchange rate differences -2,549 - At 31 December 2012 39,368 862 Depreciation, amortisation and impairment At 1 January 2011-26,323-790 Depreciation charge for the year -5,771-144 Disposals 104 - Reclassifications 45 - Exchange rate differences -673 - At 31 December 2011-32,618-934 Depreciation charge for the year -2,473-95 Impairment for the year -7,010 - Disposals 6,053 173 Reclassifications -834 - Exchange rate differences 1,895 - At 31 December 2012-34,987-856 Net book value: At 31 December 2011 15,499 102 At 31 December 2012 4,381 6 Of the year s impairment charge of SEK 7 million, SEK 1 million was attributable to the UK and SEK 6 million to the Republic of Congo. PA RESOURCES ANNUAL REPORT 2012 63

Financial reports notes Note 18 Impairment testing Exploration- and evaluation assets and oil- and gas properties Exploration and evaluation assets as well as oil and gas properties were divided by cash-generating units and tested for any need for impairment. The cashgenerating units correspond to licence rights, production sharing agreements or equivalents owned by PA Resources. A cash generating unit thus usually corresponds to each acquired asset in each country in which PA Resources carries on exploration and production operations. A period of use from 2013 through 2042 (2012-2041) has been utilised for assessment of the value-in-use per cash generating unit. The method of testing for impairment of assets in production is to calculate the present value of future estimated cash flows which are put in relation to the book values. The main variables used are as follows (assumptions for 2011 are expressed in parentheses): Discount rate before tax, interval of 9.0% 11.0% (9.0% 11.0%) Tax rate: 40% 75% (40% 75%) Royalty rate: 2% 16% (2% 16%) Oil price as expressed in the forward price curve for oil with an opening price of USD 105.0 per barrel of oil, which thereafter declines to USD 100.0 per barrel of oil and to which, from 2018, inflation is applied at 2%, which corresponds to the level of inflation applied for fixed costs. (Oil price as expressed in the forward price curve for oil with an opening price of USD 107.0 per barrel of oil, which thereafter declines and which, from 2014 onwards, amounts to a constant USD 97.0 per barrel of oil.) Forecast period: Estimated cash flows based on management expectations for the period 2013-2042 (2012 2041). The Expected Monetary Value Method is utilised for testing for impairment of assets in which oil and gas discoveries have been identified and test drilling for oil and gas reserves is planned by calculating the expected monetary values and putting these in relation to book values. Expected monetary values were calculated by multiplying the price per barrel of oil equivalents by the percentage estimate of finding oil equivalents and the expected volume of oil equivalents and reducing the value by the total drilling costs. The assumptions used for both methods have been based partly on historical experience of previous years impairment testing processes and partly on external sources in the form of technical data, industry information, third party valuations, etc. The book values for exploration and evaluation assets as well as oil and gas properties per operating segment for which impairment testing was performed are shown below. Exploration and evaluation assets as well as oil and gas properties per operating segment for impairment testing 31 December 2012 SEK 000s North Africa West Africa North Sea Other Total Non-current assets for impairment testing 3,340,607 3,154,041 770,267-7,264,915 Impairment for the year - -1,634,186-106,478 - -1,740,664 Reversal of write-downs - - - - 0 Total (net) 3,340,607 1,519,855 663,789 0 5,524,251 31 December 2011 SEK 000s North Africa West Africa North Sea Other Total Non-current assets for impairment testing 4,438,692 4,732,898 756,909-9,928,499 Impairment for the year -598,962-1,435,704-541 - -2,035,207 Reversal of write-downs - - - - 0 Total (net) 3,839,730 3,297,194 756,368 0 7,893,292 See Note 16, Exploration and evaluation assets as well as oil and gas properties, for information about impairment losses for 2012 and the preceding year. Moreover, impairment testing showed that the calculated value-in-use per cash generating unit was higher than the book value for exploration and evaluation assets as well as oil and gas properties. Note 19 Inventories Other materials and supplies (SEK 000s) Group 31 Dec. 2012 31 Dec. 2011 At 1 of January 67,718 12,170 Reclassifications -24,160 7,036 Purchase - 50,851 Used in production -352-2,548 Exchange differences -3,989 209 At 31 December before adjustment for obsolescence 39,217 67,718 Provisions for obsolescence -8,346-8,405 At 31 December 30,871 59,313 The Parent Company has no inventory. 64 PA RESOURCES ANNUAL REPORT 2012

Financial reports notes Note 20 Accounts receivable and other receivables Group Parent company SEK 000s 31 Dec. 2012 31 Dec. 2011 31 Dec. 2012 31 Dec. 2011 Accounts receivable non-interest bearing 96,874 205,862 - - Other current receivables 312,828 364,716 2,048 1,552 Prepaid insurance premium 1,870 2,427 52 52 Prepaid leasing fees 84 168 84 168 Prepaid rent 1,525 1,585 347 346 Accrued interests 12,405 84 6 84 Prepaid licence costs 346 235 346 235 Prepaid issue expenses 101,651-101,651 - Other prepaid expenses 37,885 184,829 10,937 7,189 Accrued income crude oil inventory 148,451 80,816 - - Total accounts receivable and other receivables 713,919 840,722 115,471 9,626 Accounts receivable are not interest-bearing and are generally due for payment within 30 60 days. Other receivables and accrued income are generally due in 15 90 days. Note 21 Cash and cash equivalents Group Parent company SEK 000s 31 Dec. 2012 31 Dec. 2011 31 Dec. 2012 31 Dec. 2011 Cash at banks and on hand 57,631 44,465 16,134 21,286 Total cash and cash equivalents 57,631 44,465 16,134 21,286 Cash equivalents refer only to cash at banks. The Group receives interest on available cash in banks according to variable interest rates based on the daily bank balances in each country. Note 22 Equity Number of shares A-shares B-shares Total number of shares Number of votes Number of shares Number of votes Number of shares Number of votes Share capital value, SEK At 1 January 2011 637,475,843 637,475,843 - - 637,475,843 637,475,843 318,737,921.50 Redemption convertible shares 1,050 1,050 - - 1,050 1,050 525.00 At 31 December 2011 637,476,893 637,476,893 0 0 637,476,893 637,476,893 318,738,446.50 Redemption convertible shares 759 759 - - 759 759 379.50 Reduction share capital - - - - - - -254,991,060.80 Set off issue - - 6,455,770,272 3,227,885,136 6,455,770,272 3,227,885,136 645,577,027.20 At 31 December 2012 637,477,652 637,477,652 6,455,770,272 3,227,885,136 7,093,247,924 3,865,362,788 709,324,792.40 Rights issue 3,824,865,912 3,824,865,912 3,227,885,136 1,613,942,568 7,052,751,048 5,438,808,480 705,275,104.80 B-shares conversion to A-shares 9,683,655,408 9,683,655,408-9,683,655,408-4,841,827,704-4,841,827,704 0 At 7 February 2013 14,145,998,972 14,145,998,972 0 0 14,145,998,972 14,145,998,972 1,414,599,897.20 As per 31 December 2012, PA Resources completed a set-off issue, the first transaction within the framework of the recapitalisation proposal adopted by the extraordinary general meeting on 7 December 2012. The set-off issue increased the number of shares by 6,455,770,272, and the total number of shares outstanding at year-end was 7,093,247,924. The new shares issued through the set-off issue was classified as B-shares, however, these were created for administrative reasons and were never eligible for trading. For the administrative purpose of differentiating the classes of shares, the two classes of shares had different voting rights where one A-share corresponded to one vote and one B-share corresponded to half a vote for the duration of the transition period until completion of the transaction. At the extraordinary general meeting on 7 December 2012, the share s quota value was changed from SEK 0.50 to SEK 0.10, which applied to both class A- and B-shares, and resulted in a decrease in the share capital of SEK 254,991,060.80. In early February 2013, the subsequent fully underwritten rights issue was completed, which increased the number of shares by 7,052,751,048. In parallel with this, all B-shares were converted to A-shares and, thereby, became eligible for trading on the NASDAQ OMX in Stockholm. Following the above, the total number of shares outstanding was 14,145,998,972, all shares with equal voting rights of one vote per share. Following completion of the transaction, the quota value remained at SEK 0.10 and the share capital was SEK 1,414,599,897.20. As per 31 December 2012, the Parent Company held no treasury shares nor did it hold any following completion of the transaction. At 31 December 2012, and on completion of the recapitalisation, all shares were fully paid up. PA Resources managed assets comprise equity. The purpose of the company is to generate profit for its shareholders. No other external capital requirements apply than those stipulated in the Swedish Companies Act. PA RESOURCES ANNUAL REPORT 2012 65

Financial reports notes Note 23 Interest-bearing loans and borrowings Bond loans At year-end, the Group had two bond loans outstanding. In conjunction with the breach of the bond loans covenants, as detailed below, PA Resources was granted conditional waivers until the entire recapitalisation was completed, which, at that time, included the rights issue completed in early February 2013. Pending completion, at year-end, long-term interest-bearing loans and borrowings totalling SEK 931.7 million were reclassified as current interest-bearing loans and borrowings as detailed below: 1. SEK 850.0 million (850.0) nominal, with an annual effective coupon rate of 10.5 percent. The final maturity date is 15 October 2013 and the bond was issued by the Parent Company. The bond is unsecured and is classified entirely under current interest-bearing loans and borrowings. 2. NOK 900.0 million (900.0) nominal, with an annual effective coupon rate of 12.25%. The bond loan has a redemption schedule with amortisation of NOK 90.0 million in April 2013, NOK 135.0 million in April 2014, NOK 135.0 million in April 2015 and final redemption of NOK 540.0 million on 5 April 2016. The bond loan was issued by the Parent Company, is unsecured and is classified entirely under current interest-bearing loans and borrowings since, at year-end, equity and the ratio between equity and capital employed was lower than the specified minimum levels. In conjunction with the completion of the transaction, PA Resources reclassified the current liability of SEK 931.7 million as long-term interest-bearing loans and borrowings. During the year, the amount outstanding, USD 6.2 million, was redeemed of a bond loan with an original nominal value of USD 100.0 million. Financial covenants All the bond loans have financial covenants, as follows: The company undertakes for a calendar year not to distribute a dividend, buy back the company s shares or effect other transfers of value to its shareholders of a total value exceeding fifty percent of the Group s profit after tax; The company must ensure that at any given time the Group has equity amounting to at least SEK 2,000 million on a consolidated basis; The company must ensure that at any given time the Group maintains a ratio between equity (defined as book equity) and capital employed (defined as book equity plus interest-bearing loans) of at least 0.4. In the interim report for the third quarter 2012, PA Resources reported a negative result which meant that the company was in breach of the financial covenants of the bond loans since equity was less than SEK 2,000 million and the ratio between equity and capital employed was under 0.4. In parallel, a plan was presented for the recapitalisation of PA Resources, which would rectify the breach of the covenants. In November 2012, the bondholders of both loans granted waivers for the breach of the covenants on condition that certain require ments were met in connection with the recapitalisation process, including a resolution adopting the Board s proposed set-off issue of convertibles outstanding by the extraordinary general meeting. At year-end, equity and the ratio between equity and capital employed remained under the specified minimum levels, however, completion of the recapitalisation plan in early February 2013 meant that minimum levels were restored and, accordingly, there was no longer any breach of the financial covenants. For more information, refer to Note 34 Effects of set-off and rights issue. Convertible bond PA Resources has 5,857,151 outstanding convertibles (61,510,759) corresponding to a nominal amount of SEK 93,7 million (984.2), which were issued at the beginning of 2009. The annual nominal interest rate on the convertibles is 11 percent from and including 15 January 2009. Interest is paid on 15 January each year. The convertibles mature for redemption at their nominal value on 15 January 2014 unless repayment or conversion to shares has been completed prior to this. Conversion may be performed each year in the period 1 30 September. The convertible promissory note is defined as a compound financial instrument, which means its classification is split between long-term interest-bearing loans and borrowings and equity. At the end of the period, the recorded liability in the balance sheet amounted to SEK 93,7 million (859.1). In December 2012, holders of the convertible bond were offered to set-off their holdings of convertible bonds against a new issue of B-shares at a subscription price of SEK 0.15 per new B-share. At the end of the acceptance period, 90 percent of the convertible bond holders had agreed to set off their claim as payment for the newly issued B-shares. The adjusted conversion rate for the remaining convertible bonds following the recapitalisation is SEK 6.49 (8.52) per share. For more information, see Note 34 Effects of set-off and rights issue. Furthermore, in 2012, a total of 404 (559) convertible bonds were converted during the conversion period September. The number of additional shares that can arise from conversion of the remaining convertibles is 14,439,258 (115,513,162) shares. Maturity structure of bonds and convertibles, SEK million 1,200 1,000 800 600 400 200 0 2013 2014 2015 2016 Bond (SEK 850 million) Convertible bond Bond (NOK 900 million) * A prerequisite of the above maturity structure is that the company is not in breach of any of its loan covenants. Group Parent company Non-current Interest-bearing loans and borrowings (SEK 000s) 31 Dec. 2012 31 Dec. 2011 31 Dec. 2012 31 Dec. 2011 Bond 850.0 (850.0) MSEK nominal - 809,419-809,419 Bond 900.0 (900.0) MNOK nominal - 1,016,980-1,016,980 Convertible Bond 87,083 859,149 87,083 859,149 Credit Facilities and Other non-current interest-bearing loans and borrowings 312,749 484,638 263,882 103,851 Total 399,832 3,170,186 350,965 2,789,399 Current Interest-bearing loans and borrowings (SEK 000s) Bond 850.0 (850.0) MSEK nominal 838,958-838,958 - Bond 0.0 (6.2) MUSD nominal - 42,468 - - Bond 900.0 (900.0) MNOK nominal 1,035,254-1,035,254 - Credit Facilities and Other current interest-bearing loans and borrowings 413,766 813,901 61,898 173,085 Total 2,287,978 856,369 1,936,110 173,085 Total Interest-bearing loans and borrowings 2,687,810 4,026,555 2,287,075 2,962,484 66 PA RESOURCES ANNUAL REPORT 2012

Financial reports notes Cont. Note 23 Credit facilities and Other current interest-bearing loans and borrowings At 31 December 2012, Credit facilities and Other current interest-bearing loans and borrowings were SEK 727 million (1,299), of which SEK 414 million (814) was classified as current interest-bearing loans and borrowings. At year-end, PA Resources had available credit facilities of SEK 727 million, that stem from a reserve-based lending (RBL) facility with Gunvor S.A. connected to the sale of oil and secured through collateral in region West Africa. PA Resources has pledged the bulk of the assets belonging to operations in Equatorial Guinea (Aseng field) as collateral for the loan under the loan agreement. This collateral can be released if PA Resources elects to perform refinancing through a new and larger RBL facility or other borrowings. The original credit line under the RBL facility was USD 150 million, of which the Group had a liability outstanding of USD 111.5 million at year-end. At year-end, the average nominal rate of interest for the credit facilities was approximately 7.5% and the inherent maturity profile of the credit facilities is by its nature continuous. Overdraft facilities The Group s overdraft facilities amounts to SEK 0.0 (13.8) million. Utilised overdraft facilities as at 31 December 2012 amounted to SEK 0.0 million (9.2), of which SEK 0.0 million (0.0) was attributable to the Parent Company. Note 24 Provisions Provisions as per 31 December 2012 (SEK 000s) 1 Jan 2012 Disposals Allocated Utilized Exchange difference Revaluated Group as per 31 Dec 2012 Whereof short-term Whereof pertaining to Parent company Asset retirement obligation costs 528,422-15,553 - -31,125 45,805 558,654 - - Tax related provisions 43,036-54,936-28 115-2,535-67,322 - - Other provisions 8,447 - - - -475-7,972 - - Total 579,905 0 70,489-28,115-34,135 45,805 633,948 0 0 Provisions as per 31 December 2011 (SEK 000s) 1 Jan 2011 Disposals Allocated Utilized Exchange difference Revaluated Group as per 31 Dec 2011 Whereof short-term Whereof pertaining to Parent company Asset retirement obligation costs 391,001-8,031 101,774-6,949 36,729 528,422 - - Tax related provisions 38,883 - - - 691 3,462 43,036 - - Other provisions - - 8,447 - - - 8,447 8,447 - Total 429,884-8,031 110,221 0 7,640 40,191 579,905 8,447 0 Asset retirement obligations Asset retirement obligations are reported as provisions based on the present value of the costs which are expected to be required to fulfil the obligation, using the estimated cash flows. The discount rate used takes into account the time value of money and the risk specifically relating to the liability, as assessed by the market. Reported asset retirement obligations relate to the Group s oil and gas properties in region North and West Africa and the expected date of the outflow of asset retirement obligations is from 2014 to 2018. During the year, new provisions totalled SEK 15.6 million (101.8) and as at 31 December 2012 the Group s calculated provisions for asset retirement obligations amounted to SEK 558.7 million (528.4). PA Resources applies the Full Cost Method, which means that the counterpart to the reported provision is capitalised as an asset and amortised. Future changes in provisions based on the time value of money are recognised as a financial expense. Assumptions are reviewed annually and changes in provisions are capitalised or reversed against the corresponding asset. For further information refer to Note 2.4 Critical accounting principles, estimates and assumptions. Tax-related provisions As at 31 December 2012, tax-related provisions amounted to SEK 67.3 million (43.0) and relate to estimated income tax costs and tax surcharges attributable to subsidiaries in region North and West Africa. The sum reserved was reported as an income tax expense in the income statement and as a provision in the balance sheet. Note 25 Accounts payable and other liabilities Group Parent company SEK 000s 31 Dec. 2012 31 Dec. 2011 31 Dec. 2012 31 Dec. 2011 Accounts payable non-interest bearing 169,054 256,134 3,030 3,221 Liabilities against other related parties - 21,836 - - Other current liabilities 38,214 26,341 376 391 Accrued vacation pay 1,955 1,659 1,955 1,659 Accrued interests 44,013 139,350 42,228 139,350 Accrued operating and drilling costs 194,735 119,360 - - Accrtued issue expenses 101,651-101,651 - Other accrued expenses and prepaid income 23,917 69,675 1,682 8,258 Total accounts payable and other liabilities 573,539 634,355 150,922 152,879 Accounts payable and other short-term liabilities are not interest-bearing, have a short expected term and are recognised at the nominal amount with no discounting. Accounts payable usually fall due within 30 days and other short-term liabilities within a year. The Parent Company s liabilities to Group companies are classified as long-term, see Note 26 Financial instruments. PA RESOURCES ANNUAL REPORT 2012 67

Financial reports notes Note 26 Financial instruments Financial assets and liabilities by valuation category - Group 2012 (SEK 000s) Loans end receivables Other liabilities Total carrying amount Fair value Financial assets Non-current assets Other financial assets 1,055-1,055 1,055 Total 1,055 0 1,055 1,055 Current assets Accounts receivable and other receivables 257,730-257,730 257,730 Cash and cash equivalents 57,631-57,631 57,631 Total 315,361 0 315,361 315,361 Financial liabilities Non-current liabilities Interest-bearings loans and borrowings - 399,832 399,832 395,030 Total 0 399,832 399,832 395,030 Current liablities Current interest-bearings loans and liabilities - 2,287,978 2,287,978 2,055,169 Accounts payable and other liabilities - 407,802 407,802 407,802 Total 0 2,695,780 2,695,780 2,462,971 2011 (SEK 000s) Financial assets Non-current assets Other financial assets 1,482-1,482 1,482 Total 1,482 0 1,482 1,482 Current assets Accounts receivable and other receivables 286,762-286,762 205,946 Cash and cash equivalents 44,465-44,465 44,465 Total 331,227 0 331,227 250,411 Financial liabilities Non-current liabilities Interest-bearings loans and borrowings - 3,170,186 3,170,186 2,778,681 Total 0 3,170,186 3,170,186 2,778,681 Current liablities Derivative financial instruments - 856,369 856,369 888,653 Accounts payable and other liabilities - 536,680 536,680 536,680 Total 0 1,393,049 1,393,049 1,425,333 Financial non-current assets and current assets comprise other financial assets in the form of deposits for leased drilling equipment and other shares and participations. Accounts receivable and receivables from partners are not discounted due to their short term. Accrued interest income and accrued oil income are also included. Cash and cash equivalents comprise liquid funds. Non-current liabilities and current liabilities comprise long- and short-term interest-bearing loans and borrowings. Accounts payable and payables to partners are not interest-bearing and are not discounted due to their short term. Accrued interest expense and accrued exploitation and drilling expenses are also included. 68 PA RESOURCES ANNUAL REPORT 2012

Financial reports notes Cont. Note 26 Financial assets and liabilities by valuation category Parent company 2012 (SEK 000s) Loans end receivables Other liabilities Total carrying amount Fair value Financial assets Non-current assets Receivables Group companies 3,930,357-3,930,357 3,930,357 Total 3,930,357 0 3,930,357 3,930,357 Current assets Prepaid expenses and accrued income 6-6 6 Cash and cash equivalents 16,134-16,134 16,134 Total 16,140 0 16,140 16,140 Financial liabilities Non-current liabilities Liabilities Group companies - 1,334,712 1,334,712 1,334,712 Non-Current interest-bearings loans and liabilities - 350,965 350,965 346,163 Total 0 1,685,677 1,685,677 1,680,875 Current liablities Account payables - 3,030 3,030 3,030 Current interest-bearings loans and liabilities - 1,936,110 1,936,110 1,703,301 Accrued expenses and prepaid oncome - 42,228 42,228 42,228 Total 0 1,981,368 1,981,368 1,710,559 2011 (SEK 000s) Financial assets Non-current assets Receivables Group companies 5,874,008-5,874,008 5,874,008 Total 5,874,008 0 5,874,008 5,874,008 Current assets Prepaid expenses and accrued income 84-84 84 Cash and cash equivalents 21,286-21,286 21,286 Total 21,370 0 21,370 21,370 Financial liabilities Non-current liabilities Liabilities Group companies - 2,637,681 2,637,681 2,637,681 Non-Current interest bearings loans and liabilities - 2,789,399 2,789,399 2,397,894 Total 0 5,427,080 5,427,080 5,035,575 Current liablities Account payable - 3,221 3,221 3,221 Current interest bearings loans and liabilities - 173,085 173,085 173,085 Accrued expenses and prepaid oncome - 139,350 139,350 139,350 Total 0 315,656 315,656 315,656 Financial non-current assets and current assets comprise interest-bearing receivables from Group companies and other shares and participations. Receivables from partners are not discounted due to their short term. Accrued interest income is also included. Cash and cash equivalents comprise liquid funds. Non-current liabilities and current liabilities comprise bond loans and the short-term portion of interest-bearing loans and borrowings. Accounts payable and payables to partners are not interest-bearing and are not discounted due to their short term. Interest-bearing liabilities to Group companies and accrued interest expenses are also included. As at the end of the preceding financial year, at 31 December 2012, no financial instruments valued at fair value existed in PA Resources balance sheet. PA RESOURCES ANNUAL REPORT 2012 69

Financial reports notes Cont. Note 26 Result from financial assets and liabilities by valuation category - Group 2012 (SEK 000s) Net financial items Loans and receivables Derivatives* Other financial liabilities Total result from financial assets and liabilities Result from nonfinancial assets and liabilities Total result Interest (income/expenses) 2,141 840-377,832-374,851 - -374,851 Changes in value (net gains/losses) -4,666 - -165,782-170,448-52,997-223,445 Exchange rate changes (net gains/losses) -253 - -768-1,021 - -1,021 Total -2,778 840-544,382-546,320-52,997-599,317 2011 (SEK 000s) Net financial items Interest (income/expenses) 10,887 895-283,816-272,034 - -272,034 Changes in value (net gains/losses) - 27,700-81,538-53,838-41,163-95,001 Exchange rate changes (net gains/losses) 369-16,319 16,688-16,688 Total 11,256 28,595-349,035-309,184-41,163-350,347 * Financial liabilities valued at fair value through profit or loss. Financial assets and liabilities had no impact on the Group s operating profit as set out in the statement above. As at the end of the preceding financial year, at 31 December 2012,no financial instruments valued at fair value existed in PA Resources balance sheet. Result from financial assets and liabilities by valuation category - Parent company Total result from financial assets and liabilities Result from nonfinancial assets and liabilities 2012 (SEK 000s) Loans and receivables Derivatives* Other financial liabilities Total result Net financial items Interest (income/expenses) 62,495 - -331,103-268,608 - -268,608 Changes in value (net gains/losses) - - -125,394-125,394-11,294-136,688 Exchange rate changes (net gains/losses) -365,867-4,005-361,862 - -361,862 Total -303,372 0-452,492-755,864-11,294-767,158 2011 (SEK 000s) Net financial items Interest (income/expenses) 271,550 895-402,711-130,266 - -130,266 Changes in value (net gains/losses) - 27,700-58,071-30,371-2,012-32,383 Exchange rate changes (net gains/losses) 223,155 - -50,101 173,054-173,054 Total 494,705 28,595-510,883 12,417-2,012 10,405 * Financial liabilities valued at fair value through profit or loss. Financial assets and liabilities had no impact on the Parent Company s operating profit as set out in the statement above. As at the end of the preceding financial year, at 31 December 2012, no financial instruments valued at fair value existed in PA Resources balance sheet. 70 PA RESOURCES ANNUAL REPORT 2012

Financial reports notes Note 27 Shares in subsidiaries The Parent Company s shares in the respective segments/region are categorised below. The region Other includes the parent Company in the presentation of the Group s income statement and balance sheet, see Note 6 Segment information. Subsidiary Corporate identity number Domicile Legal entity Currency Share of equity Book value (SEK 000s) in Parent company Segment Other Microdrill AB 556205-9179 Stockholm Limited company SEK 100 150 Segment North Africa Hydrocarbures Tunisie El Bibane Ltd 54230F Jersey Limited company GBP 100 29,154 Hydrocarbures Tunisie Corp 79423B Bahamas Limited company USD 100 11,748 PA Resources Overseas Ltd 3313969 Great Britain Limited company GBP 100 1,918,357 Segment West Africa PA Energy Congo Ltd 1015422 Br.Virgin Islands Limited company USD 100 86,845 Osborne Resources Ltd 85416 Bahamas Limited company USD 100 18,088 Segment North Sea PA Resources Denmark ApS 31080037 Danmark Limited company DKK 100 175 PA Resources UK Ltd 5152884 Great Britain Limited company GBP 100 126,295 PA resources E&P Services LTD 07824915 Storbritannien Limited company GBP 100 11 Total 2,190,823 Parent company acquisitions in shares in subsidiaries (SEK 000s) At 1 January 2012 acquisition cost 2,190,812 Acquisitions - Capital contribution - Adjustment acquisition value - Voluntary liquidation - Impairment loss - Disposals - Registration 11 At 31 December 2012 acquisition cost 2,190,823 PA RESOURCES ANNUAL REPORT 2012 71

Financial reports notes Note 28 Pledged assets and contingent liabilities Group Parent company Pledged assets (SEK 000s) 31 Dec. 2012 31 Dec. 2011 31 Dec. 2012 31 Dec. 2011 The pledged assets are broken down as follows: Security in the form of assets in Region West Africa 726,489 1,304,285 - - Guarantee commitment for Group loan obligations - - 726,489 1,304,285 Security in the form of assets in Region North Africa - 42,925 - - Security in the form of pledged shares - - - 42,925 Oil inventory attributable to payment of royalty in kind 6,555 526 - - Total pledged assets 733,044 1,347,736 726,489 1,347,210 Contingent liabilities (SEK 000s) Contingent liabilities are broken down as follows: Contingent liabilities attributable to the acquisition of PA Energy Congo Ltd 14,000 14,000 14,000 14,000 Total contingent liabilities 14,000 14,000 14,000 14,000 Contingent liabilities In connection with the acquisition of the subsidiary PA Energy Congo Ltd (formerly Adeco Congo BVI Ltd) there is a possible future liability to the sellers to pay a maximum amount of USD 2 million depending on future oil production achieved. Liabilities with pledged collateral see Note 23, Interest-bearing loans and borrowings. Note 29 Related party disclosure Transactions entered into between the Group, independently of one another, and related parties at arm s length are described below: Related party transactions between the Parent Company PA Resources AB and its subsidiaries and between the subsidiaries themselves relate both to third party costs which are invoiced on in full without any surcharge and to general costs and payroll costs in the home country which are invoiced on the basis of established Transfer Pricing Agreements within the Group. Investments in subsidiaries are primarily financed via external borrowing by the Parent Company. Outstanding loans between the Parent Company and subsidiaries are regulated on the basis of established Transfer Pricing Agreements and loan agreements within the Group. For information on the Group companies and the Parent Company s shareholding in subsidiaries refer to Note 27 Shares in subsidiaries. During the financial year the usual directors fees as resolved by the Annual General Meeting were paid to the Board. Remuneration in an amount of SEK 100 thousand (0) was paid in addition to these fees to a Board member pertaining to work performed in conjunction with the company s refinancing in the fourth quarter. In addition, Board members were reimbursed for expenses. For further information on salaries, directors fees, pension expenses, share-based remuneration and other benefits to related parties refer to Note 8 Remuneration and other benefits: Board of Directors and senior executives of the Parent Company. No guarantees have been issued for any outstanding loans, receivables or liabilities in respect of related parties. Neither have any guarantees been given nor assets pledged to or received by any related party. Outstanding loans and receivables in respect of related parties are deemed secure as at the balance sheet date. Note 30 Assets held for sale PA Resources signed an agreement, effective 1 January 2012, on the divestment of its ownership interests in two small producing oilfields, Ezzaouia and El Bibane, for USD 4.0 million. The transaction was completed during the second quarter of 2012, and the interests along with associated adjustments are no longer reported on the balance sheet as assets (and related liabilities) held for sale. At 31 December 2012, no other assets held for sale existed within the Group. SEK 000s 31 Dec. 2012 31 Dec. 2011 ASSETS Tangible non-current assets - 27,694 Accounts receivable and other receivables - 2,229 Total Assets available-for-sale 0 29,923 LIABILITIES Accounts payable and other liabilities - 2,735 Total Liabilities pertaining to assets available-for-sale 0 2,735 Note 31 Parent company s result from interests in Group companies In the fourth quarter of 2012, the Parent Company recognised an impairment loss of SEK 1,799.0 million in an Intra-Group receivable in conjunction with the Group s impairment of working interests in the West Africa region. In addition, during the fourth quarter, the parent company recognised an impairment loss for intra-group receivables amounting to SEK 87.5 million and SEK 44.9 million, respectively, as a result of the relinquishment of licence 9/95 (Maja) in Denmark and the Marine XIV licence in the Republic of Congo. For more information, see notes 16 and 18. During the second quarter of 2012 the parent company received dividends from subsidiaries totalling SEK 1,895.3 million.the amounts concerned are specified below. SEK 000s Jan.-Dec. 2012 Jan.-Dec. 2011 Impaiment losses, Intercompany receivables -1,931,364-1,435,704 Impaiment losses, participations in Group companies - -26,049 Dividend recieved 1,895,341 - Total financial expenses (net) -36,023-1,461,753 Note 32 Significant events after the closing date At 31 January 2013, the fully underwritten rights issue was completed and as of 7 February all shares outstanding were eligible for trading. As a result of the rights issue, PA Resources share capital increased by SEK 705,275,104.80 to SEK 1,414,599,897.20. The number of shares increased by 7,052,751,048 to 14,145,998,972. For more information, see Note 34, Effects of set-off and rights issue. 72 PA RESOURCES ANNUAL REPORT 2012

Financial reports notes Note 33 Financial risk In its operations, PA Resources is exposed to various types of financial risk. Financial risk arises when refinancing and credit risks as well as changes in inter est rates and exchange rates affect the Group s operating profit, cash flow and value. Financial risk is managed and controlled in accordance with the strategy adopted by the company s Board of Directors. This also constitutes the single most important financial control instrument for the Group s financial activities. In line with the overall targets, PA Resources manages the financial risks to which the Group is exposed. The Board reviews and approves strategies for managing each of these risks, which are summarised below. Financing and refinancing risk PA Resources business is capital-intensive. Should cash flow from operations become insufficient, the Group may require additional capital in order to acquire assets or for investments in existing licences. Refinancing risk is defined as the risk that financing or refinancing is troublesome or costly to secure. To date, PA Resources has had access to a wide range of financing at competitive rates via the money market and the equity market. Not all financial markets are available for the company at any given time, accordingly, PA Resources continuously monitors and evaluates financing and refinancing possibilities over time to be able to act when the market is favourable. Relations with banks in respect of loan requirements, foreign currency requirements and cash management are coordinated centrally by the Group s Treasury function. The Group s total outstanding interest-bearing loans and borrowings, largely in the form of bond loans, amounted on 31 December 2012 to SEK 2,688 million (4,027) maturing at various times between 2013 and 2016. In 2012, PA Resources redeemed the remaining amount, USD 6,2 million, of a bond with an original nominal amount of USD 100 million, as well as a net of amortisations and loans raised from RBL facilities of a total net amortisation of USD 76.9 million. For more information, see Note 23, Interest-bearing loans and borrowings. Liquidity risk Liquidity risk is defined as the risk that PA Resources is unable to meet its obligations to repay its liabilities on time or at a reasonable cost. The Group s management of its capital structure aims to create a balance between equity and loan financing, to ensure financing of the business at a reasonable cost of capital. As far as possible the Group endeavours to finance growth and ongoing investments from the cash flow it has generated itself. Since operations are capital-intensive, however, this is supplemented with money market financing using bonds and bank loans as well as equity market financing through the issue of new shares and convertibles. In view of the financing risk and PA Resources capital-intensive business, the Group aims always to have sufficient funds in cash and loan facilities to meet the needs that are expected to arise in the coming twelve months, and liquidity is monitored continually in order to meet forthcoming payment requirements. Liquidity risk is balanced by planning the maturity structure of the Group s outstanding financial liabilities. Ultimately, the Board monitors the Group s capital structure and financial management, approves certain matters relating to acquisitions, investments and borrowing, and monitors ongoing exposure to financial risk. Oil price risk The price of oil and gas is set in the world market and to a significant extent is dependent on various factors that the Group is unable to affect. Oil and gas prices have fluctuated substantially over the last few years and many indicators point to continuing volatility in the future. A significant decline in the price of oil and gas could negatively affect the Group s operations, profits and financial position. PA Resources operates a policy of not hedging the oil price of future sales, but this is reviewed on an ongoing basis by the management. In 2012, PA Resources did no hedging of its production and, at the end of the year, PA Resources held no financial derivatives for hedging oil prices. Under the assumption of constant 2012 production, 2 887,8 (3 145,6) Tbbl and that the average exchange rate for the year between the USD/SEK 6,78 (6,50) remains the same, a movement in the oil price of USD 10 per barrel has a positive/negative effect on the Group s revenues of SEK 195,7 million (204,4). Fall due profile on PA Resources Group financial liabilities 31 December 2012 31 December 2011 SEK 000s < 1 year 1-2 years 2-5 years > 5 years < 1 year 1-2 years 2-5 years > 5 years Interest-bearing loans and borrowings 1,606,417 695,315 913,327-1,279,946 1,506,371 2,532,206 - Derivative financial instruments - - - - - - - - Accounts payable and other liabilities 169,054 - - - 256,134 - - - Total 1,775,471 695,315 913,327 0 1,536,080 1,506,371 2,532,206 0 The table shows future undiscounted cash flows, at year-end rates, related to financial interest-bearing liabilities and the net of derivatives related to these liabilities. The variable interest rate on liabilities and derivatives as per 31 December 2012 is assumed until maturity. Interest rate risk Interest rate risk is the risk of market interest rates moving in such a manner that PA Resources net interest expense is negatively affected. The effect of a change in interest rates on the Group s operating profit depends on the loans and the investments fixed term and on the proportions of variable and fixed interest rates. Normally, the interest rates of interest-bearing liabilities vary from fixed interest to 3-month interest rates and PA Resources utilises interest swap agreements for which the interest rate can change from fixed to variable and vice versa to manage interest rate exposure. At the end of the year, the average interest rate fixing period was 1.5 (2.0) years. Utilising interest rate exposure at 31 December 2012 as a basis, a change in the market rate of interest of one percentage point would have a positive/negative effect on the Group s net financing of SEK 0.0 million (2.5). The simulation assumes a parallel shift in all interest rate curves and does not take into consideration any currency or maturity differences. As no interest-bearing instruments are recorded as available-for-sale, the impact is the same on total other comprehensive income. Foreign currency risk PA Resources is exposed to fluctuations in the foreign exchange markets as fluctuations in exchange rates can negatively affect the operating profit, cash flow and equity. The major proportion of PA Resources assets relate to international oil and gas discoveries valued in USD and which generate revenues in USD. The Group ensures a natural hedge of these assets through borrowing in USD and when loans are in local currencies utilising currency swap contracts to hedge these borrowings. The market value of all outstanding contracts at 31 December 2012 was SEK 0.0 million (0.0) and the value of all outstanding contracts has resulted in an unrealised effect on the profit at 31 December 2012 of SEK 0.0 million (9.5). PA RESOURCES ANNUAL REPORT 2012 73

Financial reports notes Cont. Note 33 Transaction risk Transaction exposure arises in the cash flow when invoicing or the costs of invoiced goods and services are not in the local currency. The majority of PA resources revenues come from the sale of oil and gas in the international market, and costs, through operation costs, operating rental costs, etcetera in USD. Discrepancies, primarily costs in local currencies in the Group s subsidiaries, affect the Group s operating profit. Expected or budgeted flows are not hedged at present. Translation risk Exchange rate changes affect PA Resources in conjunction with the translation of the income statements of overseas subsidiaries to SEK as the Group s operating profit is affected and when net assets in overseas subsidiaries are translated into SEK which can negatively affect the Group s equity. PA Resources does not hedge its translation exposure and fluctuating currency rates might negatively affect the operating profit and financial position of the Group. Currency sensitivity in transaction and translation exposure International oil operations are primarily in USD, both as regards revenue and expenses, however PA Resources does have minor exposures in TND, GBP, EUR, NOK and DKK. The Group s transaction exposure is to a major degree secured naturally through financial exposure, primarily through borrowing in USD or through currency swaps to USD to achieve the same effect. A concurrent ten percent change in each currency against the SEK would have a positive/ negative effect on the Group s operating profit of SEK 17.7 million (37.9), of which the exposure in USD/SEK accounts for positive/negative SEK 17.2 million (28.5) of the total. The sensitivity analysis builds on revenue and expenses as well as balance sheet items in the 2012 full-year report and does not take into consideration any market changes that could occur with volatile currencies. Credit risk Credit risks in financial operations Credit risk exposure arises from the investment of cash and cash equivalents and from counterparty risk attributable to trading in derivatives. Both investment of cash and cash equivalents and trading in derivatives is primarily performed by the Group s treasury function and are normally limited to banks with a strong credit rating included in PA Resources medium- to long-term financing. PA Resources strives to establish ISDA agreements with its counterparties in transactions with derivatives, which means that if a counterparty enters into liquidation, liabilities are offset against assets. At the balance sheet date, 31 December 2012, cash and cash equivalents and financial investments amounted to SEK 57.6 million (44.5). Credit risks in operations PA Resources is also exposed to the risk of not receiving payment from customers for deliveries of oil and gas. The Group normally delivers oil in large quantities in liftings, whereby a tanker load, depending on oilfield, corresponding to between 60.000 and 950,000 barrels is delivered against payment within 15 45 days. These deliveries are made only to a small number of recognised creditworthy parties, primarily major international oil and gas companies. The Group s deliveries are governed by annual contracts and Group policy is to check the creditworthiness of all customers who wish to do business on credit. In addition, receivable balances are monitored on an ongoing basis, with the result that the Group s exposure to bad debts is minor. In past years the Group has had only very few minor bad debt losses, and had none whatsoever this past year. Given its customer structure and past experience, the Group has assessed that credit insurance need not be taken out. Below is an analysis of the Group s total outstanding accounts receivable and other receivables over time as per balance sheet date, along with provisions for bad debts. As at 31 December 2012, total provisions for bad debts amounted to SEK 795 thousand (845). Exchange effects on profit before tax 2012 (SEK million) 20 15 10 5 0-5 -10-15 -20 10% 5% 0% -5% -10% Percentage change in exchange rate Change in profit before tax of which USD/SEK Timing analysis accounts receivable and other current receivables Group Group (SEK 000s) 2012 2011 Receivables past due but not recognised as impairment losses: Total exposure Fair value Total exposure Fair value Not overdue 710,564 710,564 834,869 834,869 past due < 30 days - - 2,007 2,007 past due 30-60 days - - 69 69 past due 60-90 days 495 495 270 270 past due 90-120 days - - - - past due > 120 days 2,860 2,860 3,503 2,661 Total 713,919 713,919 840,722 839,877 Group Provisions for bad debts (SEK 000s) 2012 2011 Opening balance amount as per 1 January -845-830 Provision charge for the year - - Reversed provisions - - Actual credit losses (impairment) - - Currency rate effect 50-15 Total provisions as per 31 December -795-845 74 PA RESOURCES ANNUAL REPORT 2012

Financial reports notes Note 34 Effects of set-off and rights issue Balance sheet (SEK 000s) 30 Sept. 2012 Q4 movements excluding Set-off issue Set-off issue 31 Dec. 2012 Rights issue Issue expenses After rights issue Non-current assets 5,695,918-62,819 5,633,099 5,633,099 Other current assets 726,251 21,615 747,866-101,651 646,215 Cash and cash equivalents 5,475 52,156 57,631 613,174-101,651 569,154 Total assets 6,427,644 10,952 6,438,596 613,174-101,651-101,651 6,848,468 Equity 955,529-333,638* 968,366 1,590,257 705,275-101,651 2,193,882 Non-current interest-bearing loans and borrowings 1,291,415-72,254-819,329 399,832-90,411 931,728 1,241,149 Other non-current liabilities 1,300,851 33,967 1,334,818 1,334,818 Current interest-bearing loans and borrowings 2,124,248 163,730 2,287,978-931,728 1,356,250 Other current liabilities 755,601 149,286-79,176 825,711-1,691-101,651 722,370 Total equity and liabilities 6,427,644-58,909 69,861* 6,438,596 613,174-101,651-101,651 6,848,468 * Net financial items for the fourth quarter were negatively impacted by a non-cash effect of the set-off issue in the amount of SEK -69.9 million. Key ratios 30 Sept. 2012 Q4 movements excluding Set-off issue Set-off issue 31 Dec. 2012 Rights issue Issue expenses Reclassification Reclassification After rights issue Equity per share before dilution 1.50 0.22 0.16 Equity per share after dilution 1.50 0.22 0.16 Net debt 3,410,188 39,320-819,329 2,630,179-703,584 101,651 2,028,245 Debt/equity ratio 356.9% 165.4% 92.5% Number of shares outstanding before dilution 637,477,652 6,455,770,272 7,093,247,924 7,052,751,048 14,145,998,972 Number of shares outstanding after dilution 637,477,652 6,455,770,272 7,093,247,924 7,052,751,048 14,145,998,972 As per 31 December 2012, PA Resources had carried out the first transaction within the framework of the proposed recapitalisation that was approved by the extraordinary general meeting on 7 December 2012. In the set-off issue, approximately 90% of the existing convertible bondholders converted their nominal debt including accrued interest to equity. As a result of this, shareholders equity increased by SEK 968.4 million. Net borrow ings decreased by SEK 819.3 million, corresponding to a nominal debt reduction of SEK 890.5 million. The set-off issue increased the number of shares by 6,455,770,272, and the total number of shares outstanding at year-end was 7,093,247,924. The newly issued shares were classified as B-shares and only introduced for administrative reasons, hence not eligible for trading. In early February 2013, the subsequent, fully underwritten rights issue that was directed at all shareholders, including the convertible bondholders who accepted the offer to set-off their convertible bonds, was carried out which increased the number of shares by 7,052,751,048. Thereafter, the total number of shares outstanding was 14,145,998,972. Following this, all B-shares were automatically converted into A-shares and became eligible for trading on the NASDAQ OMX in Stockholm from 7 February 2013. After deducting transaction costs of SEK 101.7 million, shareholders equity increased by SEK 603.6 million and net borrowings decreased by SEK 601.9 million. The table above shows the effect of the rights issue on the Company s financial position. Following the completed transaction, interest-bearing net debt amounts to SEK 2,028 million, and the debt/equity ratio is 92.5%. Shareholders equity exceeds SEK 2,000 million, and the ratio between shareholders equity and capital employed exceeds 40%, entailing that the Company s financial obligations have been met, enabling a reclassification of current, interest-bearing debt of SEK 931.7 million as non-current. PA RESOURCES ANNUAL REPORT 2012 75

Financial reports Proposed distribution of earnings Proposed distribution of earnings The following amounts are at the disposal of the Annual General Meeting (SEK) Retained earnings 1,398,550,928 Share premium reserve 3,071,511,451 Net result for the year 691,326,673 Total 981,633,850 The Board of Directors proposes the accumulated profit of SEK 981,633,850 be carried forward. The Board of Directors and President declare that the consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU, and give a true and fair view of the Group s financial position and results of operations. The Annual Report has been prepared in accordance with generally accepted accounting principles and gives a true and fair view of the Parent Company s financial position and results of operations. The statutory Administration Report of the Group and the Parent Company provides a fair review of the Group s and the Parent Company s operations, financial position and results of operations and describes material risks and uncertainties facing the Parent Company and the companies included in the Group. Stockholm, 20 March 2013 Hans Kristian Rød Chairman of the Board Lars Olof Nilsson Board member Paul Waern Board member Catharina Nystedt-Ringborg Board member Per Jacobsson Board member Bo Askvik President & CEO Our audit report was presented on 20 March 2013 Ernst & Young AB Björn Ohlsson Authorised Public Accountant 76 PA RESOURCES ANNUAL REPORT 2012

Financial reports Auditor s report Auditor s report Auditor s report To the annual meeting of the shareholders of PA Resources AB, corporate identity number 556488-2180 Report on the annual accounts and consolidated accounts We have audited the annual accounts and consolidated accounts of PA Resources AB for the year 2012, except for the corporate governance statement on pages 32-38. The annual accounts and consolidated accounts of the company are included in the printed version of this document on pages 25-77. Responsibilities of the Board of Directors and the Managing Director for the annual accounts and consolidated accounts The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of these annual accounts in accordance with the Annual Accounts Act and of the consolidated accounts in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act, and for such internal control as the Board of Directors and the Managing Director determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error. Auditor s responsibility Our responsibility is to express an opinion on these annual accounts and consolidated accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the annual accounts and consolidated accounts are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts and consolidated accounts. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company s preparation and fair presentation of the annual accounts and consolidated accounts in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors and the Managing Director, as well as evaluating the overall presentation of the annual accounts and consolidated accounts. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the parent company as of 31 December 2012 and of its financial performance and its cash flows for the year then ended in accordance with the Annual Accounts Act. The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the group as of 31 December 2012 and of their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act. Our opinions do not cover the corporate governance statement on pages 32-38. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts. We therefore recommend that the annual meeting of shareholders adopt the income statement and balance sheet for the parent company and the group. Report on other legal and regulatory requirements In addition to our audit of the annual accounts and consolidated accounts, we have also audited the proposed appropriations of the company s profit or loss and the administration of the Board of Directors and the Managing Director of PA Resources AB for the year 2012. We have also conducted a statutory examination of the corporate governance statement. Responsibilities of the Board of Directors and the Managing Director The Board of Directors is responsible for the proposal for appropriations of the company s profit or loss. The Board of Directors and the Managing Director are responsible for administration under the Companies Act and that the corporate governance statement on pages 32-38 has been prepared in accordance with the Annual Accounts Act. Auditor s responsibility Our responsibility is to express an opinion with reasonable assurance on the proposed appropriations of the company s profit or loss and on the administration based on our audit. We conducted the audit in accordance with generally accepted auditing standards in Sweden. As a basis for our opinion on the Board of Directors proposed appropriations of the company s profit or loss, we examined whether the proposal is in accordance with the Companies Act. As a basis for our opinion concerning discharge from liability, in addition to our audit of the annual accounts and consolidated accounts, we examined significant decisions, actions taken and circumstances of the company in order to determine whether any member of the Board of Directors or the Managing Director is liable to the company. We also examined whether any member of the Board of Directors or the Managing Director has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. We believe that the audit evidence which we have obtained is sufficient and appropriate in order to provide a basis for our opinions. Furthermore, we have read the corporate governance statement and based on that reading and our knowledge of the company and the group we believe that we have obtained a sufficient basis for our opinion. This means that our statutory examination of the corporate governance statement is different and substantially less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. Opinions We recommend to the annual meeting of shareholders that the loss be dealt with in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the financial year. A corporate governance statement has been prepared, and its statutory content is consistent with the other parts of the annual accounts and the consolidated accounts. Stockholm, 20 March 2013 Ernst & Young AB Björn Ohlsson Authorized Public Accountant A member firm of Ernst & Young Global Limited PA RESOURCES ANNUAL REPORT 2012 Brevpapper.indd 1 2013-02-15 09:04:23 77

OTHER information Guide TO PA Resources ACCOUNTING Guide to PA Resources accounting This is a brief explanation of some of the key items in PA Resources financial statements and accounting. The full accounting principles are detailed under Note 2 on pages 49 53. + Significant revenue and expenses Oil production PA Resources recognised revenue is principally based on the volume of oil produced and which is vested in the Group. The Group receives a share of each respective field s total production that corresponds to the Group s working interest in the field. This means that revenue corresponds to production prior to deductions for royalties and tax oil (more information about this is available on the right). When the oil is produced it is initially stored until the customer collects the oil via liftings. Oil that is not sold remains in own inventory. The outstanding own inventory of oil is stated at fair value at the end of the period and recognised as revenue. This means that oil that is vested in PA Resources is recognised as revenue irrespective of whether it was sold in the period or not. Expenses Cost of sales Production costs One of the largest cost items for the Group is production costs which are included under the item Cost of sales. This includes costs for such as day-to-day operation, leasing of equipment and vessels as well as maintenance and repair of the Group s production facilities. Depreciation Expenditures attributable to exploration and development of oil fields are seen as investments. Depreciation starts in conjunction with the start of production and is depreciated in line with the production in relation to the estimated total proven and probable reserves of oil and gas. Technical installations and equipment are subject to linear depreciation over the assets expected useful life. Cost of sales Royalty expenses Oil that has been produced and which has or will be paid to the state in the form of royalties, either by barrel of oil or through a cash payment, are recognised gross in the income statement. Produced royalty oil is included under total revenue. The corresponding royalty expense is recognised in the income statement item Cost of sales. Impairment losses PA Resources examines the value of its assets on an ongoing basis to determine whether any need for impairment exists. This is performed when events or circumstances indicate that the present value of an asset is lower than the carrying value and thus that the carrying value is no longer motivated. Such indications include changes in business activities, the sale of an asset, relinquishment of a licence to the state, a decline in the assessed volume of oil and gas reserves and significant changes in the oil prices. 78 PA RESOURCES ANNUAL REPORT 2012

OTHER information Guide TO PA Resources ACCOUNTING Significant balance sheet items Exploration and evaluation assets Exploration and evaluation assets comprise acquired licence/concession rights and capitalised exploration and evaluation expenditure. When PA Resources appraises and assesses an exploration permit as profitable a plan for development is applied for. On receiving the plan for development, the asset is reclassified under oil and gas properties. If the asset is relinquished to the government authorities or is assessed as unprofitable, the asset is expensed by PA Resources through recognition as an impairment loss in profit or loss. Oil and gas properties Oil and gas properties comprise exploration and evaluation assets as well as capitalised development expenses. Depreciation commences for the actual asset in conjunction with the start of production. Assets are continuously tested for any possible need for impairment, for example, when the size of oil and gas reserves decreases, the asset is expensed through recognition as an impairment loss in profit or loss. In general, the book value increases, which is the amount reported in the balance sheet, from the time when the licence was acquired and then in line with investment outlays. The book value decreases in line with amortisation and depreciation which is performed on an ongoing basis during production on the licence or when PA Resources, at some stage, makes an impairment of the licence value. The book value does not correspond to the market value of an asset. The market value of an asset is defined as the value that might be obtained in a sale and is determined not by the book value but to a great extent by future expectations. Interest-bearing loans and borrowings The Group s interest-bearing loans and borrowings, long and shortterm, comprise bond loans, convertible bonds and various types of credit facilities. The convertible bond is defined as a compound financial instrument, which means its classification is split between interest- bearing liabilities and equity, where about 93 percent is classified as interest-bearing liabilities. PA Resources total liabilities, both long and short-term, include the Group s interest-bearing loans and liabilities as well as tax liabilities, provisions and accounts payable and other liabilities. Only interest-bearing liabilities are included in the calculation of the debt/ equity ratio. For more information, see Note 23 Interest-bearing loans and borrowings on page 66. Provisions for asset retirement costs After their operations have ceased, oil companies are obliged to restore the oil field s area. Therefore, those expenses the Group is expected to incur for each licence pertaining to restoration is measured repeatedly and provision is made for these future costs. For more information, see Note 2.4 Critical accounting principles and Note 24 Provisions on page 67. Worth knowing about taxes Reported tax Tax rates and tax laws not only vary between the countries in which PA Resources operates, they also vary between different oil and gas licences in the same country. In certain countries and licences, no corporation tax is recognised. However, all forms of corporation tax are calculated on taxable profit for each individual oil field at the applicable tax rates. Reported tax may also include deferred tax, which means that the tax is allocated over a period and paid later or not at all. In certain countries and licences, tax oil is recognised that applies to oil produced which, in addition to any royalty, is to be delivered to the state. Tax oil is included in total revenue and the corresponding tax oil expense is recognised within the framework of reported tax. At present, the only licence agreements held by PA Resources where tax oil is delivered to the state are in the West Africa region. Worth knowing about exchange differences The Group is impacted by changes in exchange differences that affect the income statement and the balance sheet. The Group s functional currency is Swedish kronor, but the Group also conducts business in several countries with other currencies. For example, oil and gas properties are valued by the market in USD and generate revenue in USD, while borrowing and costs are primarily in USD but also in local currencies. Accordingly, changes in exchange rates impact the Group in connection with cross-border transactions, in part on the balance sheet date when the assets and liabilities are translated from the local functional currency to the Group s presentation currency and when borrowed currency is translated to the respective company s functional currency at the exchange rates applicable at the date of translation. Read more in Note 33, Financial risks. Tax paid The tax reported in the cash flow statement is the tax paid in the form of corporation tax by the Group. At present, PA Resources only pays corporation tax in Tunisia. PA RESOURCES ANNUAL REPORT 2012 79

OTHER INFORMATION INFORMATION FOR SHAREHOLDERS Information for shareholders Annual General Meeting 2013 The Annual General Meeting (AGM) for PA Resources will be held at 4:00 p.m. (CET) Tuesday, 14 May 2013 at Polstjärnan, Sveavägen 77 in Stockholm. Registration for the AGM will commence at 3:15 p.m. Attendance Shareholders who wish to attend the AGM must: be listed in the register of shareholders maintained by Euroclear Sweden AB on Tuesday, 7 May 2013, notify the Company of their intention to attend the AGM not later than 4:00 p.m. (CET) on Tuesday, 7 May 2013. Notification Registrations can be submitted at www.paresources.se where additional information on the registration process is available. On notification, shareholders must provide their name, personal ID/corporate registration number, address, telephone number and registered shareholding and, where applicable, the names of any assistants and proxies. In respect of representation by proxy, the power of attorney must be in writing. It must be dated and signed. An original power of attorney must be submitted to PA Resources in good time prior to the AGM. Proxy forms are available from the company and from the company s website www.paresources.se. Representatives of legal entities must produce a certified copy of the certificate of incorporation or equivalent authorisation documents. An admission card will be sent at least four days prior to the AGM to those shareholders that have notified their attendance of the AGM. Shareholders must bring this admission card to the AGM. The admission card should be presented at the entrance to the hall used for the AGM. If a shareholder has no admission card a new admission card can be issued on presentation of identification. Notice of the AGM and other information is available on www.paresources.se at least four weeks prior to the AGM. Nomination Committee Financial information 2013 2014 Interim report Quarter 1 (January March) 24 April 2013 Annual General Meeting 2013 14 May 2013 Interim report Quarter 2 (January June) 14 August 2013 Interim report Quarter 3 (January September) 23 October 2013 Year-end report (Quarter 4) 5 February 2014 Distribution policy A printed copy of the Annual Report is sent on request and can be ordered by sending an e-mail to ir@paresources.se. All of PA Resources Annual Reports from the year 2000 onwards are available on our website under Investors/Financial Reports. Give us your feedback Can we improve the Annual Report or our Interim Reports? We welcome your suggestions and viewpoints by e-mail to ir@paresources.se. Investor Relations contact Carolina Haglund Strömlid Tel. +46 (0) 8 545 211 54 ir@paresources.se The Nomination Committee s tasks include preparing proposals for election of Board members and comprises the following members: Sven A. Olsson, Gunvor Group Ltd, Chairman of the Nomination Committee Bengt Stillström, AB Traction Göran Ågerup, Ågerup Fastigheter AB Hans Kristian Rød, Chairman of the Board Shareholders may submit proposals to the Nomination Committee at any time via e-mail to: valberedningen@paresources.se Proposals must be submitted in good time prior to the AGM for the Nomination Committee to be able to take the proposal into consideration.! Subscribe to news and reports Follow PA Resources by subscribing for press releases and financial reports via e-mail or RSS. Register your details on www.paresources.se. Production: By PA Resources in collaboration with 3BL Stockholm. Operational photos: Images Frikha, PA Resources, Noble Energy, Murphy Oil. Photos Board of Directors: Alexander Ruas. Photos Group Management and Statement of the CEO: Sussi Lorinder. Printing: Edita. Translation: The Bugli Company AB. 80 PA RESOURCES ANNUAL REPORT 2012

Glossary Anomaly: An abrupt increase in seismic amplitude that can indicate the presence of hydrocarbons. Appraisal well: A well drilled to determine the extent and scope of a petroleum find. Barrel: Oil production is often given in numbers of barrels per day. One barrel = 159 litres, 0.159 cubic metres. In English the abbreviations bbl (barrel) or stb (stock tank barrel) are often used. Barrels of oil equivalent: Unit of volume used for petroleum products. An indication used when oil, gas and NGL are to be summarised. Abbreviated boe. (see oil equivalents) Block: A country s exploration and production area is divided into different blocks that indicate the geographical layout. Blowout: A blowout is the uncontrolled discharge of oil, gas or water from an oil well BOE: Barrels of oil equivalent Boepd: Barrels of oil equivalent per day Bopd: Barrels of oil per day Brent oil: A reference oil for the various types of oil in the North Sea. West Texas Intermediate (WTI) and Dubai are other reference oils. Oil is priced in relation to these reference oils. Condensate: A mixture of the heavier elements of natural gas, i.e. pentane, hexane, heptane etc. The gas is a liquid at atmospheric pressure. Continental shelf: A gradual, rapidly deepening seabed on a continental plate. The ocean area between Norway, Denmark and the UK is for example a continental shelf. The continental shelf is generally situated at a depth of 0-500 metres and is concluded in a continental slope. Contingent resources: Estimated recoverable volumes from known accumulations that have been confirmed through drilling but which do not yet fulfil the requirements for reserves. Crude oil: The oil produced from a reservoir, after associated gas is removed in separation. A fossil fuel formed by plant and animal matter several million years ago. Cubic foot/meters: Unit of volume for gas, most often given in billions of cubic feet/meters. Discovery: One or several gathered occurrences of oil or gas in a well, where tests, samples or logs have confirmed hydrocarbons to be present. The definition includes both commercial and technical discoveries. The discovery will receive the status of a field when a plan for development and operation has been approved by the authorities. Exploration well: A common term for wildcat and wells drilled when exploring for oil and gas, to gather facts about the petroleum s quality, the bedrock s make-up, the reservoir s extent and location etc. Farm in/farm out: The holder of interest in an oil licence may transfer (farm out) shares to another company in exchange for this company taking over some of the work commitments in the licence, such as paying for a drilling or a seismic investigation within a certain period. In return, the company brought in receives interest in any future revenues. If the conditions are met the company may retain the interest if not the interest is taken back by the original holder. Fault: A fracture within rock structures where relative motion has occurred across the fracture surface. Flaring: Controlled burning of gas that must be released for safety reasons at an oil production facility. Used when impossible to utilize the gas. FPSO-vessel: Floating, Production, Storage and Offloading vessel used in an oil field. FDPSO-vessel: Floating, Drilling, Production, Storage and Offloading vessel used in an oil field. Gas field: A field containing natural gas. The gas can contain larger or smaller amounts of condensate which is separated as a liquid when the gas is produced (the pressure and temperature drop). Hydrocarbons: The compounds comprised of the basic elements hydrogen (H) and carbon (C). If an occurrence primarily contains light hydrocarbons, they are most often in gas form in the reservoir, and are called a gas field. If it is primarily heavy hydrocarbons, they are in liquid form in the reservoir, and called an oil field. Under certain conditions both can exist in the reservoir where a gas cap lies above the oil. Oil always contains a certain element of light hydrocarbons that are freed in production, also known as associated gas. Injection well: A well where gas or water is injected to give pressure support in a reservoir. By injecting gas, water or both into a reservoir, one can increase the degree of recovery by maintaining the pressure and thereby forcing the hydrocarbons into the production well. Jack-up rig: A type of drilling rig used when drilling oil wells at sea. Is anchored to the seabed. Licence: A licence is a permit granted to an oil company from the government of a country to look for and produce oil and gas. Oil and natural gas assets are usually owned by the country in which the oil or natural gas is discovered. The oil companies obtain permission from the respective country s government to explore for and extract oil and natural gas. These permits can be called concessions, permits, production sharing contracts or licences depending on the country in question. A licence usually consists of two parts: an exploration permit and a production licence. LNG (Liquefied natural gas): Liquid dry gas, primarily methane that has transformed to liquid form upon cooling to minus 163 C at atmospheric pressure. One ton of LNG corresponds to approximately 1,400 cubic meters of gas. LNG is transported by special vessels. Natural gas: A mixture of hydrocarbons in gas form found in the bedrock, usually 60 95 percent methane. Net Entitlement share: The proportion of revenue, production or reserves and resources that accrue to the oil company after deductions for royalties and taxes. NGL (Natural gas liquids): Liquid gas that consists of three different gases: ethane, propane and butane, as well as small amounts of heavy hydrocarbons. The gas is partially liquid at atmospheric pressure. The gas is transported by special vessels. Offshore: Designation for operations at sea. Onshore: Designation for operations on land. Oil equivalents: Abbreviated o.e. An indication used when oil, gas and NGL are to be summarised. The concept is tied to the amount of energy released upon combustion of different types of petroleum. Because oil equivalents depend on the amount of energy, it is not constant and different conversion factors are used. In Oil Field Units, 5,800 cubic feet of gas = 1 barrel of oil equivalents. According to the Norwegian Petroleum Directorate, 1,000 standard cubic metres of gas = 1 standard cubic meter of oil equivalents. Operator: A company, which on behalf of one or more companies in a partnership and with approval of the country's authority, leads the work on an oil and gas licence or a field. OSS-vessel: Oil Storage Service vessel. Petroleum: Collective term for hydrocarbons, whether they occur in solid, liquid or gas state(s). Platform: An installation used during the production of oil or gas. Oil operations at sea are conducted from both floating platforms and platforms fixed to the seabed. Play: A conceptual model used for analyzing a geographically and stratigraphic delimited area, where a specific set of geological factors must be present for producible volumes to be proven. Such geological factors are a reservoir rock, trap, mature source rock, migration routes, and that the trap was formed before the migration of hydrocarbons ceased. Produced water: Is the water produced from an oil well together with oil, gas or other hydrocarbons. The water is separated from the hydrocarbons and purified before it is pumped back down into the reservoir or are taken care of in other ways. Production well: A well used to extract petroleum from a reservoir. Proven and Probable reserves 2P: Proven and Probable reserves with a probability in excess of 50% of extraction in the current economic climate. Proven reserves 1P: Extraction assessed as having a probability in excess of 90% in the current economic climate. Reservoir: The sedimentary rock in which hydrocarbons are accumulated as a result of good porosity (lots of cavities in the stone) and from which hydrocarbons can be produced as a result of high permeability (presence of flow channels that can transport the oil). Risked prospective resources: Prospective accumulations of hydrocarbons which have yet to be proven through drilling. Includes resources classified under Leads. Consideration is taken in respect of the likelihood of making discoveries. Seismic: Seismic surveys are made to be able to describe geological structures in the bedrock. At sea, sound signals are transmitted from the ocean surface, and the echoes are captured. Such surveys can among other things be used to locate occurrences of hydrocarbons. Sidetrack: Drilling from an existing well path towards a new well target. Source rock: The geological formation in which oil and gas were created and originate. Sweet crude oil: Crude oil containing low levels of sulfur compounds, especially hydrogen sulfide [H2S] and carbon dioxide. The facilities and equipment to handle sweet crude are significantly simpler than those required for other potentially corrosive types of crude oil. Terminal: A land facility that receives and stores crude oil and products from oil production at sea. The oil is transported to the terminal by tanker or through pipelines. Trap: A trap is a geologic structure or a stratigraphic feature capable of retaining hydrocarbons in a reservoir. It might be a change in rock type with zero permeability, unconformities, folds, faults etc in the bedrock that prevent the hydrocarbons to migrate from the reservoir. Well: A hole drilled down to a reservoir to look for or extract oil or gas. Wildcat well: The first well drilled when exploring for oil and gas on a new, defined geological structure (a prospect). Working Interest (WI): The proportion of revenue, production or reserves that accrue to the oil company before taxes, royalties and other curtailment.

HEAD OFFICE SWEDEN PA Resources AB (publ) Kungsgatan 44, level 3 SE-111 35 Stockholm Sweden Tel: +46 (0) 8 545 211 50 Fax: +46 (0) 8 20 98 99 Tunisia PA Resources Tunisia Immeuble les 4 Pilastres, Rue du Lac Tanganika 1053 Les Berges du Lac - Tunis Tunisia Tel: +216 71 862 866 Fax: +216 71 861 561 United Kingdom PA Resources UK Ltd Waterfront Winslow Road, Hammersmith London, W6 9SF United Kingdom Tel: +44 (0) 20 3322 0100 Fax: +44 (0) 20 3322 0101 Representative Office Republic of Congo (Brazzaville) PA Resources Congo S.A. Avenue Alphonse Fondere, Immeuble CNSS Appt. MZZ2, Brazzaville Republic of Congo! Find more information on www.paresources.se PA Resources AB (publ) Kungsgatan 44, level 3, 111 35 Stockholm, Sweden Tel +46 (0)8 545 211 50 www.paresources.se ID No. 556488-2180 Registered office Stockholm