International exploration activities in 2008 have focused on high-grading our portfolio with strict prioritisation and sequencing of the drilling targets. Fourty exploration and appraisal wells were completed in 2008 and at year end eight of these were considered to be discoveries or confirmed discoveries. At year end, nine wells were pending final evaluation. The total exploration expenses were NOK 9.2 billion in 2008, compared with NOK 7.7 billion in 2007.

Our international entitlement production was 290 mboe per day in 2008 compared to 307 mboe per day in 2007. The average daily equity production of oil and gas was 465 mboe per day in 2008, compared to 422 mboe in 2007. Equity volumes represent produced volumes under a PSA contract that corresponds to StatoilHydro's percentage ownership in a particular field. Entitlement volumes, on the other hand, represent StatoilHydro's share of the volumes distributed to the partners in the field, which are subject to deductions for, among other things, royalties and the host government's share of profit oil. Entitlement volumes lifted is the basis for revenue recognition, while equity production volumes affect operating costs more directly. Under the terms of a PSA, the amount of profit oil deducted from equity volumes will normally increase with the cumulative return on investment to the partners and/or production from the licence. The distinction between equity and entitlement is relevant to most PSA regimes. The main countries in which we operate under PSAs are Algeria, Angola, Azerbaijan, Libya, Nigeria and Russia.

Acquisitions in 2008 included the purchase of 50% of the Peregrino project in Brazil, making StatoilHydro 100% owner and operator of the field. StatoilHydro formed a strategic alliance with Chesapeake Energy Corporation and acquired a 32.5% interest in Chesapeake's Marcellus shale gas acreage onshore USA. We closed the sale of all our shallow water assets on the Shelf in the Gulf of Mexico (GoM) to Mariner Energy, Inc. and divested our interests in the UK fields Dunlin (28.76%) and Merlin (2.35%).

The total capital expenditure of NOK 48.7 billion in 2008 was higher than in previous years, triggered by many projects under development in addition to the acquisition of new assets to secure longer term growth, such as Peregrino in Brazil and Marcellus Shale acreage in USA.