Fourth Quarter 2006 Presentation

The total revenue for the 4th quarter amounted to NOK 8.3 million, giving a full year revenue of NOK 17.6 million. The group`s revenues from the oil and gas production in the quarter amounted to NOK 1.6 million (4th quarter 2005, NOK 3 million) giving a full year 2006 revenue of NOK 7 million (year 2005, NOK 7 million). The production in the 4th quarter was 29.4 million cubic feet of gas (4th quarter 2005, 31.4 million cubic feet of gas) giving a total production for 2006 of 114.8 million cubic feet (year 2005, 91.9 million cubic feet) and 1,108 barrels of oil (4th quarter 2005, 1,222 barrels of oil) giving a total production for 2006 of 4,214 barrels of oil (year 2005, 3,184 barrels of oil). Production in the 4th quarter was low due to lack of well maintenance in the New Ace field prior to the group’s acquisition of 98% ownership in Sandhawk Energy LLC, our partner in the New Ace field, in 4th quarter. Based on the increased investments in 4th quarter and continued investment during 2007 the group has established a production target to exceed 1,000 bbls/day in 2007.

In the 4th quarter the group accounted for revenue of NOK 6.8 million from the sale of seismic data in relation to the group’s participation in a seismic project offshore Colombia (4th quarter 2005, NOK 3.8 million). This brings the total sale of seismic for the year to NOK 10.2 million (year 2005, NOK 3.8). Rocksource participates both as an investor and with the aim of positioning the group for future licenses on the Colombian shelf as part of its ongoing exploration activities. The processing of the seismic data was completed during the 2nd quarter, and the investment in the project was fully recorded by 30 June.

The group’s operating expenses in 4th quarter of NOK 38.9 million (4th quarter 2005, NOK 33.2 million) are affected by expensed exploration costs of NOK 23.6 million whereas NOK 13.3 million is related to the Norwegian Continental Shelf (NCS), costs related to the option program of NOK 4.2 million and increased payroll expenses due to the build of the organisation and the acquisition of Sandhawk. Exploration and production companies operating on the NCS can claim a 78% refund of their exploration costs limited to the taxable losses for the year. In 4th quarter the group has accounted for positive income taxes refundable of NOK 10.4 million, giving a total of NOK 17.1 million refundable for the year.

The periodic result for the 4th quarter shows a loss of NOK –20.7 million (4th quarter 2005 NOK -23.9 million) producing earnings per share of NOK -0.039. The basic result per share is for the respective period and is also the diluted result per share. For the year 2006 the loss is NOK -88.2 million equal to basic and diluted earnings per share of NOK -0.167.

The group had a cash flow of NOK –42.8 million in 4th quarter (192.4 million in 4th quarter 2005), of which investing activities accounted for NOK -26.5 million (NOK -28.0 million in 4th quarter 2005). This gives the group a cash balance at the end of the year of NOK 105.8 million.

The group’s working capital at the end of this quarter is NOK 115.6 million (NOK 231.1 million in 4th quarter 2005) and the equity equalled NOK 334.4 million (NOK 420.1 million in 4th quarter 2005), giving the group an equity ratio of 93.4% (95.0% in 4th quarter 2005). The group has no long term interest-bearing liabilities.

The acquisition of 98% ownership in Sandhawk Energy LLC, and the results from this acquisition have been consolidated into the 4th quarter accounts.

Events after 4th quarter

Award of licenses:
During January 2007 the group was awarded exploration licenses in the 24th licensing round in the UK and in the 2006 APA round on the Norwegian Continental Shelf. An overview of the license portfolio is included in the enclosed 4th quarter presentation.

Drilling and discoveries in the US:
During 4th quarter 2006 the group sanctioned the drilling of 2 exploration wells in the US. Both of these wells have been announced successful in 2007. The group has also sanctioned the drilling of a third well, and has decided to deepen the initial well to increase reserve and production potential.

Share capital increase due to exercise of options:
The group runs an option program for its employees. In connection with the program there was a capital increase of 233,332 shares the 7th of February increasing the total number of shares to 529,377,989 with a share capital of 132,344,497.25.

For further information about the presentation please follow this link.

Oslo, 27.2.2007
Rocksource ASA

Trygve Pedersen
CEO

+47 90 09 77 41

Published: 27.02.2007