Statement of Financial Position − Directional

• ¹ Net debt is calculated as total borrowings (including lease liabilities) less cash and cash equivalents.
• ² Solvency ratio is calculated in accordance with the definition provided in section 4.3.24 Covenants

Shareholders’ equity decreased by US$254 million from US$858 million at year-end 2020 to US$604 million at year-end 2021, mostly due to the following items:

• Completion of the EUR150 million (US$178 million) share repurchase program executed between August 5, 2021 and October 11, 2021;
• Dividend distributed to the shareholders for US$165 million;
• Decrease of the hedging reserves by US$54 million; and
• Positive net result of US$121 million in 2021.

The movement in hedging reserve is mainly caused by the increase of the marked-to-market value of the interest rate swaps due to increasing market interest rates during the year. This was partially offset by the decreased marked-to-market value of forward currency contracts, mainly driven by the appreciation of the US$ exchange rate versus the hedged currencies (especially EUR).

It should be noted that under Directional policy, the contribution to profit and equity of the substantial FPSOs program under construction will largely materialize in the coming years, subject to project execution performance, in line with the generation of associated operating cash flows.

Net debt increased by US$1,308 million to US$5,401 million at year-end 2021. While the Lease and Operate segment continues to generate strong operating cash flow, the Company drew (i) on project finance facilities for Liza Unity (FPSO), Prosperity (FPSO) and the FPSO Sepetiba and (ii) on the bridge loan facilities for FPSO Almirante Tamandaré and FPSO Alexandre de Gusmão to fund continued investment in growth.

Almost half of the Company’s debt as of December 31, 2021 consisted of non-recourse project financing (US$2.9billion) in special purpose investees. The remainder (US$3.5 billion) comprised of (i) borrowings to support the on-going construction of five FPSOs which will become non-recourse following project execution finalization and release of the Parent Company Guarantee and (ii) the loan related to the DSCV SBM Installer. The Company’s Revolving Credit Facility (RCF) was undrawn at year-end and the net cash balance stood at US$1,059 million (December 31, 2020: US$383 million). The year-end cash balance includes significant residual proceeds from the aggregate US$1,255 million bridge loans for the FPSOs Almirante Tamandaré and Alexandre de Gusmão which were both fully drawn in 2021. Lease liabilities totaled US$57 million (December 31, 2020: US$71 million).

Total assets increased to US$9.7 billion as of December 31, 2021, compared with US$7.9 billion at year-end 2020. This resulted from the substantial investments in property, plant and equipment (mainly Liza Unity (FPSO), Prosperity (FPSO), FPSO Sepetiba, FPSO Almirante Tamandaré, FPSO Alexandre de Gusmão and awarded limited scope for the FPSO for the Yellowtail development project) and the increase in the net cash balance following the full drawdown of the bridge loan facilities for FPSO Almirante Tamandaré and FPSO Alexandre de Gusmão.

The relevant covenants (solvency ratio and interest cover ratio) applicable for the Company’s RCF, undrawn as at year-end 2021, were all met at December 31, 2021. In line with previous years, the Company had no off-balance sheet financing.

The Company’s financial position has remained strong as a result of the cash flow generated by the fleet and the successful adaptation of the Turnkey segment to a more competitive and unpredictable market.