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HYDRO CONCLUDES DIALOGUE WITH SEC REGARDING PROVED UNDEVELOPED RESERVES
As Hydro reported on May 10, 2004, the company, before filing its Form 20-F for 2003, initiated this dialogue after becoming aware of the substantial variation in the estimates of the proved undeveloped reserves among the Ormen Lange partners. Based on the outcome of the dialogue with the SEC, Hydro has decided to book in the 2003 Form 20-F its 18.07 percent share in Ormen Lange at 234 million barrels of oil equivalents (boe), which is 102 million boe lower than the reserve figure estimate in the 2003 annual report to shareholders. This does not result in any change in the expected reserves and production profile described in the field development plan (PDO) for Ormen Lange, unanimously agreed by the partnership in December 2003. The Norwegian authorities approved the PDO on April 2, 2004. Hydro’s 2003 booking of proved undeveloped reserves for Ormen Lange represents 49 percent of Hydro’s share of the estimated recoverable reserves in the field, as reflected in the PDO. Based on the methodology now applied for Ormen Lange, certain adjustments have been made for other fields in Hydro’s portfolio of proved undeveloped reserves. This has resulted in a reduction of the proved undeveloped reserves compared to those reported in Hydro’s 2003 annual report to shareholders amounting to 59 million boe. Of this amount, 19 million boe relates to the Snøhvit field. Early in 2004 Hydro entered into an agreement to sell its 10 percent share in Snøhvit to Statoil. Also included in this adjustment is 26 million boe related to the Rosa/Lirio field in Angola, pending a formal approval of the field development by the Angolan authorities. The modifications and adjustments described above, inclusive of Ormen Lange, result in a change in the total volume of Hydro’s proved oil and gas reserves reported in its 2003 annual report to shareholders from 2,449 million boe to 2,288 million boe, representing 6.6 percent. The difference relates to proved undeveloped reserves; there is no change in proved developed reserves. Hydro’s reserve replacement ratio for the three years ended December 31, 2003 was accordingly 114 percent. For the year 2003 isolated, the reserve replacement ratio was 133 percent.
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