NOL: Interim Financial Information 30 June 2020

NORTHERN OCEAN LTD.

RESULTS FOR THE SECOND QUARTER AND SIX MONTHS

ENDED JUNE 30, 2020

Highlights - Second Quarter

• In June 2020, the Company agreed to amend the West Bollsta contract with Lundin Energy Norway AS to defer commencement to early fourth quarter and receive compensation during the idle period after specific conditions are met.
• In June 2020, an amendment and waivers to certain covenants were agreed with the lenders under the term loan facility effective through December 2020.

Results

In the second quarter, operating revenue was $24.8 million compared to $19.1 million in the previous quarter. The West Mira continued operations under contract and achieved technical utilization of 92% for the quarter and year-to- date at 88%. The West Mira was out of service for three days in June related to repairs on the deck crane. Contract revenue was $23.0 million, reimbursable revenue was $1.7 million and other revenue from the provision of management services was $0.2 million in the second quarter.

Total operating expenses were $27.2 million compared to $29.1 million in the previous quarter. Rig operating expenses were $18.7 million, which is roughly in line with the last quarter and includes impacts from the coronavirus COVID-19 ("Coronavirus"). Reimbursable expenses were $1.6 million and depreciation was $5.6 million. Administrative expenses were $1.2 million in the quarter, which include remaining professional services associated with the Company's spin-off from Northern Drilling.

Other financial expenses were $3.4 million compared to $6.5 million in the previous quarter. Loan interest expense was $4.0 million, amortization of deferred charges was $0.5 million and there was a foreign exchange gain of $1.1 million due to appreciation of the Norwegian Kroner throughout the quarter compared with a foreign exchange loss of $2.4 million in the first quarter.

The net loss in the second quarter was $5.8 million resulting in a basic and diluted loss per share of $0.09.

Business Update

In the second quarter 2020, the Company continued its operations on the West Mira and contract preparations on the West Bollsta, while adapting to new health and safety measures to reduce risk from the global pandemic. The West Mira experienced downtime in the end of June and into July which amounted to 21 days out of service across both periods. The rig has returned to drilling activities for Wintershall Norge AS ("Wintershall") and the manager is working closely with the client to ensure safe and efficient operations continue.

The West Bollsta continues its contract preparation phase while the crew works to gain acceptance by Lundin Energy Norway AS ("Lundin") and progress the attestation of compliance ("AOC") items to be ready for its initial well in the Barents in the coming months. The idle period compensation has been delayed mainly due to testing of the modified blowout preventer and is expected to commence drilling activities in the Barents Sea in early fourth quarter 2020.

The Company's revenue backlog at June 30, 2020 is estimated at $319 million, excluding options and performance bonuses and adjusted for current estimates of well programs. The third quarter to-date technical utilization is approximately 82%, which includes 17 days from the crane repairs.

In June, the Company and its lenders agreed to an amendment and waivers for certain covenants in its term loan facility effective through end of December 2020. Discussions with the Company's manager have been initiated with the objective to find a solution to the outstanding balances and terms for the provision of management services.

Outlook

The Company continues to believe in the long-term fundamentals of the harsh environment market.

Recent significant reductions in demand for natural resources has caused for adjustment in oil company capex spending and delays in offshore drilling programs. However, the harsh environment market continues to remain stronger compared to other international regions. Additionally, certain tax relief schemes could provide potential incentives for oil companies to continue or expand activities in Norway where the Company's rigs are well suited to remain competitive.

The Company continues to remain focused on having both rigs operating under their contracts and maintaining relationships with its stakeholders to ensure that drilling activities continue through these challenging and uncertain times.

Forward Looking Statements

The Company's activities are subject to significant risks and uncertainties that can have an adverse effect on the Company's business, financial condition, results of operations and cash flow. See Note 1 to the unaudited condensed consolidated financial statements.

This Report contains certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which it operates, sometimes identified by the words "believes", "expects", "intends", "plans", "estimates" and similar expressions. The forward-looking statements contained in this Report, including assumptions, opinions and views of the Company or cited from third-party sources, are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. The Company does not provide any assurance that the assumptions underlying such forward-looking statements are free from errors, nor does the Company accept any responsibility for the future accuracy of the opinions expressed in the presentation or the actual occurrence of the forecasted developments. No obligations are assumed to update any forward-looking statements or to conform these forward-looking statements to actual results.

The Board of Directors

Northern Ocean Ltd.

Hamilton, Bermuda

August 28, 2020

Questions should be directed to:

Scott McReaken: Chief Executive Officer [phone]

NORTHERN OCEAN LTD.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

		CONDENSED CONSOLIDATED
2019	2020	STATEMENT OF OPERATIONS	2020	2019	2019
Apr-Jun	Apr-Jun	(in thousands of $)	Jan-Jun	Jan-Jun	Jan-Dec
-	23,045	Contract revenue	39,821	-	11,184
-	1,666	Reimbursable revenue	3,928	-	2,108
-	102	Other income	211	-	756
-	24,813	Total operating revenues	43,960	-	14,048
657	18,688	Rig operating expenses	37,107	768	13,999
-	1,633	Reimbursable expenses	3,790	-	2,025
-	5,628	Depreciation	13,293	-	2,984
53	1,240	Administrative expenses	2,050	107	1,411
710	27,189	Total operating expenses	56,240	875	20,419
(710)	(2,376)	Net operating loss	(12,280)	(875)	(6,371)
57	3	Interest income	159	140	255
(321)	(3,452)	Other financial income (expense)	(10,000)	(515)	(3,049)
(974)	(5,825)	Net loss before taxes	(22,121)	(1,250)	(9,165)
-	67	Tax	1,208	-	931
(974)	(5,758)	Net loss	(20,913)	(1,250)	(8,234)
-	(0.09)	Basic loss per share ($)	(0.33)	-	(1.74)
		CONDENSED CONSOLIDATED
2019	2020	STATEMENT OF COMPREHENSIVE LOSS	2020	2019	2019
Apr-Jun	Apr-Jun	(in thousands of $)	Jan-Jun	Jan-Jun	Jan-Dec
(974)	(5,758)	Net loss	(20,913)	(1,250)	(8,234)
-	45	Foreign currency translation (loss) income	(6)	-	13
-	45	Other comprehensive (loss) income	(6)	-	13
(974)	(5,713)	Comprehensive loss	(20,919)	(1,250)	(8,221)

See accompanying notes that are an integral part of these unaudited condensed consolidated financial statements.