Twelve months ended 31 December
IFRS income statement (in NOK billion)	2008	2007	08-07 Change	2006	07-06 Change
Total revenues and other income	219.8	179.2	23 %	179.2	0 %
Operating expenses	23.5	29.1	(19 %)	19.2	52 %
Selling, general and administrative expenses	(0.1)	0.3	(135 %)	0.5	(30 %)
Depreciation, amortisation and impairment	24.0	23.0	4%	20.9	10 %
Exploration expenses	5.5	3.6	52%	3.5	5 %
Total expenses	52.9	56.1	(6 %)	44.1	27 %
Net operating income	166.9	123.1	36%	31.5	291 %
Operational data:
Liquids price (USD/bbl)	91.5	70.9	29%	63.6	11 %
Liquids price (NOK/bbl)	515.4	415.2	24%	408.3	2 %
Transfer price natural gas (NOK/scm)	1.9	1.4	34%	1.4	3 %
Liftings:
Liquids (mboe per day)	807.8	831.1	(3 %)	856.0	(3 %)
Natural gas (mboe per day)	637.0	598.6	6%	610.0	(2 %)
Total liquids and gas liftings (mboe per day)	1,444.7	1,429.8	1%	1,466.0	(2 %)
Production:
Entitlement liquids (mboe per day)	823.8	817.9	1%	864.0	(5 %)
Entitlement natural gas (mboe per day)	636.9	598.7	6%	610.0	(2 %)
Total entitlement liquids and gas production (mboe per day)	1,460.7	1,416.5	3%	1,474.0	(4 %)

We generated total revenues of NOK 219.8 billion in 2008 and NOK 179.2 billion in 2007 and 2006. An increase of 31% in the average oil price in USD of oil sold by E&P Norway to Manufacturing and Marketing contributed NOK 54.6 billion, and a 35% increase in the average transfer price in NOK of natural gas sold by E&P Norway to Natural Gas, contributed NOK 17.9 billion. Lifted volumes of natural gas increased by 6.7%, making a positive contribution of NOK 3.2 billion. This was offset by a negative currency exchange rate deviation of NOK 11.1 billion due to a 7.2% decrease in the USD/NOK exchange rate. In addition, other income increased by NOK 3.1 billion, mainly as a result of a change in the fair value of derivatives. Lifted volumes of crude oil decreased by 2.5%, making a negative contribution of NOK 3.1 billion.

From 2006 to 2007 there was an increase of 11% in the average oil price in USD of oil sold by E&P Norway to Manufacturing & Marketing contributed NOK 13.3 billion, and a 2% increase in the average transfer price in NOK of natural gas sold by E&P Norway to Natural Gas, contributed NOK 1.1 billion. This was offset by a negative currency exchange rate deviation of NOK 12.0 billion due to a 9% decrease in the USD/NOK exchange rate. Lifted volumes of crude oil decreased by 3%, making a negative contribution of NOK 3.8 billion, and there was a 2% decrease in lifted volumes of natural gas, making a negative contribution of NOK 0.9 billion. In addition, other income increased by NOK 2.4 billion, mainly as a result of higher income from derivatives and higher processing income.

The average daily lifting of oil in 2008 was 808 mbbl per day, compared with 831 mbbl per day in 2007 and 856 mbbl per day in 2006.

The average daily entitlement oil production in 2008 was 824 mbbl per day, compared with 818 mbbl per day in 2007 and 864 mbbl per day in 2006. The increased production from 2007 to 2008 was mainly related to the start-up of the Volve field in February 2008, higher production at Kvitebjørn until the shutdown from August 2008, compared with 2007 when Kvitebjørn was shut down to allow safe drilling operations most of the year, new wells at Fram and building up production of Ormen Lange. The increase was partly offset by declining production from wells in the Grane, Norne, Troll Olje, Tordis, Visund and Sleipner fields.

The reduced production from 2006 to 2007 was largely caused by the shutdown of production on the Kvitebjørn field from 1 May 2007 in order to allow drilling operations to be carried out safely, as well as a natural decline on the Oseberg field. The reduction in production was partly offset by increased production from the Kristin field, which reached plateau level in late 2007.

The average daily entitlement gas production was 637 mboe per day in 2008 (equal to 101.3 mmcm or 3.58 mmcf), compared with 599 mboe in 2007 (equal to 95.2 mmcm or 3.36 mmcf) and 610 mboe in 2006 (equal to 97.0 mmcm or 3.42 mmcf).

Operating, general and administrative expenses were NOK 23.4 billion in 2008. Operating, general and administrative expenses were NOK 29.4 billion in 2007 and NOK 19.6 billion in 2006. Operating costs amounted to NOK 23.5 billion in 2008. Operating costs amounted to NOK 29.1 billion in 2007 and NOK 19.2 billion in 2006.

The decrease of NOK 6.0 billion in operating, general and administrative expenses from 2007 to 2008 was mainly due to a decrease in other expenses of NOK 6.8 billion, mainly due to restructuring costs as a result of the merger in 2007 and a decrease in transportation costs by NOK 1.3 billion in 2008 due to increased elimination and reduced booking. In addition, selling, general & administrative expenses decreased by NOK 0.4 billion and processing costs decreased by NOK 0.3 billion, from 2007 to 2008. This was partially countered by an increase of NOK 2.7 billion in operating plant costs, which was largely due to the start up of new fields of NOK 1.1 billion, increased costs of gas purchased for injection at Grane by NOK 0.5 billion and increased operational activity.

The increase of NOK 9.8 billion in operating, general and administrative expenses from 2006 to 2007 was mainly due to an increase in other expenses of NOK 6.3 billion, mainly due to restructuring costs as a result of the merger in 2007 and an increase of NOK 3.2 billion in operating plant costs, which was largely due to an increase in well maintenance costs of NOK 0.9 billion, higher operation and maintenance costs of NOK 0.8 billion, higher production fees, mainly due to the introduction of nitrogen oxide charges of NOK 0.4 billion in 2007, Grane Gas purchases totalling NOK 0.3 billion, higher business development costs of NOK 0.3 billion and higher head office research and development costs of NOK 0.2 billion. In addition, processing costs increased by NOK 0.4 billion from 2006 to 2007.

The unit production cost was NOK 37.31 per boe in 2008 compared with NOK 46.26 per boe in 2007 and NOK 26.93 per boe in 2006. The total production cost was NOK 19.9 billion in 2008, compared with NOK 23.9 billion in 2007 and NOK 14.5 billion in 2006.

The 19% decrease from 2007 to 2008 is due to a decrease in costs of 17% and an increase in production of 3%. Indirect operating costs decreased by NOK 7.2 billion mainly due to restructuring costs as a result of the merger in 2007 and the refund in 2008 of the licence partners' proportional share of the restructuring costs. Operating plant costs increased by NOK 2.7 billion, due to both higher activity and increased pressure on costs in the industry. NOK 1.1 billion is attributed to the startup of new fields. Other variable costs increased by NOK 0.8 billion due to loss on sales of assets.

The 60% increase from 2006 to 2007 is due to both an increase in costs of 65% and a decrease in production of 4%. Indirect operating costs increased by NOK 5.5 billion due to restructuring costs as a result of the merger in 2007. Direct operating costs increased by NOK 3.2 billion, due to both higher activity and increased pressure on costs in the industry.

Depreciation, depletion and impairment expenses were NOK 24.0 billion in 2008. Depreciation, depletion and amortisation expenses were NOK 23.0 billion in 2007 and NOK 20.9 billion in 2006. The NOK 1.0 billion increase from 2007 to 2008 was mainly due to higher depreciation costs as a result of higher depreciation offshore due to increased production and changes in the portfolio of producing fields.

The NOK 2.1 billion increase from 2006 to 2007 was mainly due to higher depreciation costs as a result of asset retirement costs and higher depreciation offshore due to changes in the portfolio of producing fields.

Exploration expenditure (including capitalised exploration expenditure) in 2008 amounted to NOK 8.7 billion, compared with NOK 5.7 billion in 2007 and NOK 4.6 billion in 2006. The increase stems primarily from a higher number of wells drilled. The increase in exploration expenditure from 2006 to 2007 was mainly due to increased drilling and seismic activity, as well as to a significant increase in the area fee.

From 2006 to 2007, the drilling expenditure increased by approximately NOK 0.4 billion, while the increase in seismic activity amounted to NOK 0.3 billion. The increase in area fee was due to new regulations on the NCS ,and it contributed approximately NOK 0.4 billion to the increased costs.

Exploration expenses in 2008 were NOK 5.5 billion, compared with NOK 3.6 billion in 2007 and NOK 3.5 billion in 2006, mostly due to more wells being drilled.

In 2008, 39 exploration and appraisal wells and nine exploration extension wells were completed on the NCS, of which 27 exploration and appraisal wells and six exploration extension wells were discoveries. In 2007, 24 exploration and appraisal wells and two exploration extension wells were completed. Of these, 16 exploration and appraisal wells and both exploration extension wells resulted in discoveries.

In 2006, 18 exploration and appraisal wells and five exploration extension wells were completed, of which eight appraisal and exploration wells and two exploration extension wells were discoveries.

Drilling of seven exploration and appraisal wells was ongoing at the end of the fourth quarter of 2008. Ten exploration and appraisal wells have been completed since 31 December 2008. Of these, eight exploration and appraisal wells were discoveries: Obesum2, Visund S1, Dompap/Måke sidetrack, Fulla, Curran, Pan sidetrack, Katla and Asterix. Verona and Obelix were dry.

The reconciliation of exploration expenditure with exploration expenses is shown in the table below.

Net operating income in 2008 was NOK 166.9 billion compared to NOK 123.2 billion in 2007 and NOK 135.1 billion in 2006. The NOK 43.7 billion increase in 2008 was mainly due to price and volume effects and NOK 5.5 billion in restructuring and other costs arising from the merger in 2007.

The NOK 11.9 billion decrease from 2006 to 2007 was mainly due to price and volume effects; NOK 5.5 billion in restructuring and other costs arising from the merger; higher operating costs of NOK 3.2 billion (mainly due to higher operation and maintenance costs and well maintenance); increased depreciation (mainly due to higher asset retirement costs, which contributed NOK 2.1 billion to the decrease); an increase in other operating expenses of NOK 1.0 billion, and processing and transportation costs that increased by NOK 0.4 billion in 2007.

	Twelve months ended 31 December
Exploration (in NOK billion)	2008	2007	08-07 Changes	2006	07-06 Changes
Exploration expenditure (activity)	8.67	5.75	51%	4.65	24%
Expensed, previously capitalized exploration expenditure	0.75	0.05	1398%	0.18	(72 %)
Capitalized share of current period's exploration activity	(3.89)	(2.16)	(80 %)	(1.35)	(60 %)
Exploration expenses	5.53	3.64	52 %	3.48	5 %

Net operating income in 2008 was NOK 166.9 billion compared to NOK 123.2 billion in 2007 and NOK 135.1 billion in 2006. The NOK 43.7 billion increase in 2008 was mainly due to price and volume effects and NOK 5.5 billion in restructuring and other costs arising from the merger in 2007.

The NOK 11.9 billion decrease from 2006 to 2007 was mainly due to price and volume effects, NOK 5.5 billion in restructuring and other costs arising from the merger, higher operating costs of NOK 3.2 billion, mainly due to higher operation and maintenance costs and well maintenance, increased depreciation, mainly due to higher asset retirement costs, which contributed NOK 2.1 billion to the decrease, an increase in other operating expenses of NOK 1.0 billion and processing and transportation costs increasing by NOK 0.4 billion in 2007.