NOL: Interim Financial Information 30 September 2020

NORTHERN OCEAN LTD.

RESULTS FOR THE THIRD QUARTER AND NINE MONTHS

ENDED SEPTEMBER 30, 2020

Highlights - Third Quarter Subsequent Event

• West Bollsta commenced its initial contract for Lundin Energy Norway AS on October 6, 2020.

Results

In the third quarter, operating revenue was $21.4 million compared to $24.8 million in the previous quarter. The West Mira continued operations under contract and achieved technical utilization of 79% for the quarter and year-to-date at 86%. The West Mira was out of service for 20 days during the quarter mainly related to repairs on the deck crane. Contract revenue was $20.1 million, reimbursable revenue was $1.1 million and other revenue from the provision of management services was $0.2 million in the third quarter.

Total operating expenses were $28.1 million compared to $27.2 million in the previous quarter. Rig operating expenses were $20.3 million, which is $1.6 million higher than the previous quarter mainly due to repair costs associated with the deck crane incident as well as replenishment of spare parts inventory. Reimbursable expenses were $1.1 million and depreciation was $5.5 million. Administrative expenses were $1.3 million in the quarter.

Other financial expenses were $2.5 million compared to $3.4 million in the previous quarter. Loan interest expense decreased to $3.4 million compared with $4.0 million in the previous quarter due to the lower debt balance and amortization of deferred charges was $0.5 million. There was a foreign exchange gain of $1.4 million due to appreciation of the Norwegian Kroner throughout the quarter compared with a foreign exchange gain of $1.1 million in the second quarter.

The net loss in the third quarter was $8.1 million resulting in a basic and diluted loss per share of $0.13.

Business Update

In the third quarter 2020, the Company continued delivering drilling services while adopting new measures to promote the health and wellbeing of our people amid the global pandemic. The West Mira continued drilling activities for Wintershall Norge AS ("Wintershall") and is drilling its fifth well of the contracted ten well program. The firm contracted term is now estimated to the end of Q4 2021 and Wintershall has options for six additional wells (at market terms) that would extend employment through Q4 2022.

The West Bollsta commenced operations on October 6, 2020 for Lundin Energy Norway AS ("Lundin") and began drilling activities in the Barents Sea. The West Bollsta will drill exploration wells first then continue in the Rolvsnes

and Luno II development fields under its ten well contract. The firm contracted term is estimated through Q2 2022 and Lundin has options for four additional wells (at market terms) that would extend employment through Q4 2022

The Company's revenue backlog at September 30, 2020 is estimated at $269 million, excluding options and performance bonuses and adjusted for current estimates of well programs. The fourth quarter to-date technical utilization for the fleet is approximately 89%.

In the second quarter 2020, the Company and its lenders agreed an amendment of and waivers in respect of certain covenants in its term loan facility effective through the end of December 2020. The Company has an ongoing dialogue with its lenders regarding the amendments and current state of the business. Additionally, discussions with Seadrill regarding outstanding balances related to the projects continue and the Company is working towards agreeing solutions with its stakeholders in the near term.

Outlook

The Company continues to see long-term fundamentals strengthening in the harsh environment offshore drilling market for premium rigs.

While demand for natural resources has pulled back due to economic slowdown resulting from the global pandemic, the harsh environment markets, especially in Norway, continue to remain active and are showing supportive demand into 2021 and beyond. With the market having higher barriers to entry and naturally a smaller rig count versus international markets, it is further along in balancing rig supply and demand remains high for premium high specification drilling rigs. The Company's rigs are top tier by having high automation with safe and efficient systems, including battery hybrid power and lower emissions solutions. The Company's fleet is fully contracted and operating today and we remain focused on maintaining relationships with stakeholders to ensure drilling activities continue during 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

November 30, 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
Jul-Sept	Jul-Sept	(in thousands of $)	Jan-Sept	Jan-Sept	Jan-Dec
-	20,166	Contract revenue	59,987	-	11,184
-	1,069	Reimbursable revenue	4,997	-	2,108
-	163	Other income	374	-	756
-	21,398	Total operating revenues	65,358	-	14,048
(69)	20,266	Rig operating expenses	57,373	699	13,999
-	1,061	Reimbursable expenses	4,851	-	2,025
-	5,488	Depreciation	18,781	-	2,984
2	1,265	Administrative expenses	3,315	109	1,411
(67)	28,080	Total operating expenses	84,320	808	20,419
67	(6,682)	Net operating (loss) profit	(18,962)	(808)	(6,371)
20	7	Interest income	166	160	255
(443)	(2,506)	Other financial income (expense)	(12,506)	(958)	(3,049)
(356)	(9,181)	Net loss before taxes	(31,302)	(1,606)	(9,165)
-	1,064	Tax	2,272	-	931
(356)	(8,117)	Net loss	(29,030)	(1,606)	(8,234)
-	(0.13)	Basic loss per share ($)	(0.46)	-	(1.74)
		CONDENSED CONSOLIDATED
2019	2020	STATEMENT OF COMPREHENSIVE LOSS	2020	2019	2019
Jul-Sept	Jul-Sept	(in thousands of $)	Jan-Sept	Jan-Sept	Jan-Dec
(356)	(8,117)	Net loss	(29,030)	(1,606)	(8,234)
-	8	Foreign currency translation income	2	-	13
-	8	Other comprehensive income	2	-	13
(356)	(8,109)	Comprehensive loss	(29,028)	(1,606)	(8,221)

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