Review of financial reporting – Fred. Olsen Energy ASA

The review covers the company's impairment testing of rigs as of year-end 2014. In 2014 one rig was impaired by MUSD 42.7, while in 2015 FOE recognised impairment losses for the fleet of MUSD 418.9 in the second quarter and MUSD 31.0 in the third quarter.

FOE reviews the rigs each quarter for any indication of value impairment. If any such indication exists, the company estimates the recoverable amount for each cash-generating unit, defined as the individual rig. The recoverable amount is calculated by discounting future cash flows. The model is fixed, whereas the assumptions are updated every quarter.

Finanstilsynet has commented on some of the assumptions employed in the value in use calculation. In Finanstilsynet's view estimated cash flows must reflect the weighted average of all possible outcomes, including the more negative scenarios that may occur. Finanstilsynet has further commented on the determination of the discount rate, and how income taxes are taken into account in the impairment testing. The comments have not resulted in additional impairment loss as of 31 December 2014.

FOE states that Finanstilsynet's suggestions and comments will be taken into account in future reporting.

Please direct any queries to:
Head of section Christian Falkenberg Kjøde, +47 22 93 99 46, mobile: +47 90 94 79 14.