The Aker share decreased 57 per cent in the first quarter, compared to a 65.5 per cent drop in oil price and a 24 per cent decrease in the Oslo Stock Exchange's benchmark index ("OSEBX"). So far in Q2, our NAV is up 24 per cent to NOK 30 billion and the Aker share is up 20 per cent to NOK 283.  

"A microscopic enemy has had significant adverse effects on global economy, and especially the oil market, unlike anything we can remember. Plunging oil demand coupled with supply increases, created a perfect storm. Aker is exposed to industries that have been hit especially hard, but we have managed through challenging times before. We have learned from past experiences the importance of a strong balance sheet and liquidity position to not just weather the storm, but also to pursue opportunities and regain shareholder value. That is why we have increased our liquidity reserve to NOK 7.2 billion," said Aker's President and CEO, Øyvind Eriksen.

While the ultimate impact of the pandemic and market situation is still unknown, Aker is bracing itself for long-term effects of the crisis. The oil service industry has been hit especially hard. Projects in progress are slowing down due to lockdown of countries and businesses, and oil companies are canceling or postponing a large proportion of new projects and other activities. Some temporary changes to the Norwegian petroleum tax regime have been proposed by the industry itself (NOROG) to stimulate activity and avoid significant and permanent reductions in capacity and competency for the supplier industry, safeguard tax revenues, and avoid large social expenditures for the country.

The counter proposal by the Government last week does not have the intended effects on activity, employment, and tax revenue. The practical and anticipated differences between the NOROG proposal and Government proposal for Aker Solutions, Kvaerner and MHWirth, measured by activity and employment, are outlined in the document attached hereto. The short version is that the Government proposal will most likely have no effect on activity in Kvaerner and only marginal positive effects on activity for parts of Aker Solutions. The analysis explains how serious the current situation is both for the oil services industry and for a large number of local municipalities hosting the industry. The material constitutes the basis for some hard decisions that we have to make in the time ahead.

"The value of our oil service activities only accounts for 4 per cent of our gross assets, but measured by employment, competency and technology, Aker Solutions, Kvaerner and MHWirth are punching above their weight. These are companies with employees and capabilities of vital importance both for future oil and gas activities and for the transition to `green solutions' like offshore wind, carbon capture and storage, and electrification. Without efficient governmental initiatives to stimulate new activity, a significant part of the capacity and competency in the oil service industry in Norway is likely to be dramatically reduced. Hence, the proposal from NOROG is of utmost importance, not only to Aker, but also to the future of industry in Norway and our country at large," said Eriksen.

"I'm grateful for how the industry has come together in this time of crisis and stands united behind a proposal which will facilitate a base activity needed to maintain capacity and competency. I sincerely hope that our elected officials will also be able to put ideological differences aside and support an industry which has been impacted brutally by the current lockdown. In reality, there are no alternative projects for thousands of highly skilled white- and blue-collar workers unless activity is stimulated as suggested. The resources and capabilities of the oil and gas industry have been instrumental in building Norway as the unique society we are all enjoying. The industry acknowledges the need for changes, but it will still be of vital importance for existing and new industrial activities," Eriksen adds.

"In times like this, it's important to keep in mind that Aker is about more than oil and gas. Through fast-growing portfolio companies, we are a part of global trend lines that have amplified and accelerated during the COVID-19 pandemic. The shift to `green industries' and renewable energy is expected to maintain momentum as focus is shifting to governmental initiatives designed to stimulate new activity and to transform national economies. New software solutions and automatization are not just making it possible to work from home, but are also making industries more efficient and less exposed to human risk factors like COVID-19. The focus on health and healthy living also continues to accelerate. All these global trend lines fit well with our strategies to build offshore wind and carbon capture capabilities in Aker Solutions and Kvaerner and to further strengthening the successes of Cognite and Aker BioMarine in the industrial software and Marine biotech industry segments, respectively," said Eriksen. 

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