AnnuAl report 2011 · 2010 2030 BAU 2050 BAU 60 55 50 45 40 35 30 25 20 15 10 5 0 14 6 12 47 51 57 19 22 22 9 17 16 4 1 1 1 5 6 Gas demand in business as usual (BAU) scenario Buildings

AnnuAl report 2011

About EbN

Based in Utrecht, EBN B.V. invests in exploration for and production of gas and

oil. In the Netherlands EBN does this together with national and international oil

and gas companies who, as licence holders, take the lead on these operations.

EBN B.V. is itself active in trading gas, condensate and oil and has a 40% interest in the natural gas wholesaling company

GasTerra B.V. The profits generated by these activities are paid in full to the Dutch state, our sole shareholder.

EBN not only invests but also facilitates and shares knowledge across the sector and advises the Dutch government on

the mining climate and on new opportunities for making use of the subsurface.

Exploration

EBN’s influence and responsibilities

Gas storageRequest

for licenceExploitation/ production

Distribution(wholesale)

Distribution(private)

| EBN Annual Report | 20112 EBN Annual Report | 2011 | 3

2011 2010

number of participations 183 185

of which exploration 47 48

EBN’s share of sales (billion m3)1 302 332

in millions of euros:

sales (from continuing activities) 7.103 6.486

net profit from continuing activities 2.131 2.076

payments to the State 5.788 5.339

capital expenditure 611 607

depreciation and amortization 617 499

number of employees3 68 75

EbN, thE NumbEr oNE pArtNEr for oil ANd gAs compANiEs iN thE NEthErlANds

1 Unless otherwise stated, all volumes in this report are expressed in billions of m3 natural gas (35.17 billion at 0 degrees Celsius and 101.325 kPa) based on EBN’s participation percentage.

2 This includes the proportional share of sales in the concessions in which EBN does not, itself, receive the gas but is entitled to a proportional share in the proceeds.

3 Total number of employees at year end 2011.

KEy figurEs

EBN Annual Report | 2011 | 5

Preface by Jan Dirk Bokhoven 7

1 Report by the Supervisory Board 11

2 Report by the Executive Board 15

3 Corporate Governance and risk Management 29

4 Financial Statements 37

General 38

Accounting policies 40

Consolidated statement of comprehensive income 48

Consolidated balance sheet 49

Summary of changes in shareholder’s equity 50

Consolidated statement of cash flows 51

Notes to the consolidated financial statements 52

Notes to the statement of comprehensive income 53

Notes to the consolidated balance sheet 56

Policy to control financial risks 62

Other notes 67

Company profit and loss account 70

Company balance sheet 71

Notes to the company financial statements 72

Other information (profit appropriation) 73

Independent auditor’s report 74

Key figures 77

Glossary 78

Contact information 80

tAblE of coNtENts

EBN Annual Report | 2011 | 7

VisionThere is a

substantial amount of potentially producible gas in Northwest Europe. Gas is a

continuous energy and income source for the Netherlands and it is essential for a

sustainable energy supply in Europe.

To facilitate and stimulate operators in

optimally exploiting (existing/new) gas fields

To discover and develop existing and new subsurface potential for the Netherlands

MissionTo optimally exploit the subsurface and contribute

to a sustainable energy supply

Strategic PillarsTo contribute to sustainable energy management in the

Netherlands

| EBN Jaarverslag | 20116

However a number of developments clearly indicate,

however, that the oil and gas industry and the Dutch

government need to take the initiative in stimulating the

exploration, production, transportation and storage of

gas. The number of exploration wells drilled is falling. The

major reserves such as the Groningen Field are gradually

becoming depleted and producing gas from smaller fields

is becoming more difficult. Social pressure on (exploratory)

drilling and gas storage is also on the increase. Maintai-

ning the right infrastructure for gas transport is a crucial

factor in the Dutch ambition to become a major logistics

hub in Northwest Europe for the storage and transport of

gas, but also for the (continued) development of existing

and new fields.

In the light of these developments, EBN reviewed its

vision, mission and strategy in 2011. The major elements

can be summarized in three strategic pillars.

Gas plays a crucial role both in energy supply in the Netherlands and in the

Dutch economy. Moreover, gas is indispensable for achieving a more sustainable

energy supply. Gas will therefore remain extremely important for the next forty

to fifty years, in any event.

prEfAcEjAN dirK boKhovEN“Gas is the backbone of our current energy supply”

jAN dirK boKhovEN:


The first strategic pillar emphasizes the importance to op-

timize the exploitation of the potential of the existing fields.

Knowledge acquisition and exchange, an optimal invest-

ment climate and the application of new technologies are

important factors in encouraging operators to maximise

production from existing fields.

EBN aims to contribute to this by, for example, sharing

knowledge on techniques for producing more gas from

a field and on the application of, for example, fracturing

technology, which makes it possible to access gas reser-

ves more effectively and efficiently.

The second pillar focuses on seeking and developing new

fields and encouraging the production of difficult-to-extract

gas, such as natural gas found in shale and coal seams.

To that end, it is crucial to maintain the infrastructure in or-

der to ensure that there economic development and eva-

cuation alternatives for–new– fields. The 30/30 ambition

we formulated in 2009 (to produce 30 billion cubic metres

of gas from small fields in the Netherlands by 2030) is de-

finitely still valid within the framework of our new strategy.

We have concretised this objective and demonstrated

that, with the right effort, it is possible to achieve.

Furthermore, EBN aims to contribute to a stable energy

supply in the Netherlands and, where possible, to con-

tribute to making it sustainable, which is our third pillar.

Gas is the backbone of the current energy supply and

gas remains a significant part of the energy mix. It is the

cleanest fossil fuel and, it is flexibly deployable, so peaks

and troughs in the energy supply can easily be smoothed

out. That is important, especially in combination with wind

energy, for example, which is sustainable yet not con-

stantly available.

In 2011, EBN took part in a survey conducted by Energie

Forum NL, a platform of organisations operating in various

areas within the energy sector. The report on this survey,

which was published in January 2012, shows that com-

bining renewable energy sources with gas offers the best

prospect for contributing to achieving a sustainable energy

supply and the ambitious targets for the reduction of CO2

emissions. You can download this report at www.ebn.nl

To provide maximum support for these strategic activities,

it is essential that we actively and consistently exchange

ideas with all stakeholders. Not only the negative publicity

and difficult decision-making regarding drilling for gas in

shale but also the public resistance to the Bergermeer gas

storage project clearly indicate that good dialogue and

knowledge exchange are a major condition for success.

EBN’s stakeholder management focuses on increasing

social acceptance of gas as the cleanest fossil fuel, the

acceptance of safe, responsible exploratory drilling and

achieving a positive investment and decision climate for

existing and new projects. EBN will increasingly take the

initiative and play an active role in bringing together various

discussion partners, a role that fits perfectly with our posi-

tion in the midst of public and private parties.

We will continue to actively manage our participations. Our

new vision, mission and strategy provide a clear direction

for our activities in the coming years.

Signed by J.D. Bokhoven

Chairman of the Executive Board

2010 2030 BAU 2050 BAU

60

55

50

45

40

35

30

25

20

15

10

5

0

14

612

4751

57

19

2222

91617

41

1 1

65

Gas demand in business as usual (BAU) scenario

Buildings

Industry

Transport

Agriculture

Energy

Sou

rce:

EC

N

5.000

4.500

4.000

3.500

3.000

2.500

2.000

1.500

1.000

500

0

1980 1990 2000 2010 2020 2030

Worldwide primary energy demand per energy source in the GAS scenario

Oil

Gas

Coal

Biomass

Nuclear energy

Other

HydropowerS

ourc

e: O

EC

D/IE

A


rEport by thE supErvisory boArd 1


The board approved a number of the Executive Board’s de-

cisions, including the investments in the gas development

K4-Z and the development of the Q13a-Amstel oil field.

The board also approved the new management regulations

and the revised regulations for protecting whistle-blowers.

Amongst others, the following issues were discussed: the

newly formulated long term strategy, the progress of the

Bergermeer and Schoonebeek projects, the proposed ex-

pansion of the Norg gas storage facility, social acceptance

of gas production and various technical and market deve-

lopments relevant to EBN, as well as the developments in

the market for flexibility. The board also paid a working visit

to APX-Endex in June.

The board discussed the functioning of the Executive Board

without its presence. A self-evaluation was also made of the

functioning of both the individual members of the Supervisory

Board as well as the board as a whole. That gave no cause

for any further action.

EBN is not a listed company, so the Corporate Governance

Code does not apply to the organisation. EBN does, how-

ever, endorse the code’s point of view that transparency

towards stakeholders is crucial and, where possible and

relevant, follows the principles of the code. With this, EBN

follows the government policy for State participations. The

section on Corporate Governance and Risk Management in

this report includes a paragraph indicating those principles

of the code that EBN follows.

The board complies with the independence criteria and

the profile sketch as approved by the shareholder on the

grounds of article 12 paragraph 2 of the articles of as-

sociation. The Chairman of the Board, Mr Van der Meer,

is the primary contact person for EBN’s Executive Board.

The entire board has a joint responsibility. All members of

the board are also members of the remuneration and audit

committees. EBN has chosen to merge the remuneration

and appointment committees and, refer to them jointly as

the remuneration committee. Mr Kramer acts as chairman

of the remuneration committee and Mr Gratama van Andel

as chairman of the audit committee.

Audit committee

The audit committee met twice in 2011 in the presence

of the Executive Board attended both meetings, while the

auditors of Ernst & Young attended one of them. During

the meetings, the audit committee reviewed the annual

report, the financial statements and the auditors’ report for

2010. The audit committee was closely involved in the ten-

der procedure for the nomination of the external auditor.

This resulted in the nomination of Ernst & Young to the

shareholder. The shareholder appointed the external audi-

tor according to the committee’s nomination. The commit-

tee members also discussed the funding plan and credit

facilities, the cash flow forecast, risk management and the

evaluation of the financial returns from various investment

projects approved by the Supervisory Board.

Remuneration committee

The remuneration committee met three times in 2011.

During the financial year 2011 Mr J.W.P.M. Haenen (com-

mercial director) stepped down as from 1 January and

Mr D.G. Roest (financial director) as from 31 March. The

board greatly appreciates Messrs Haenen and Roest’s

positive contribution to the autonomisation of EBN, the

transition from Heerlen to Utrecht and the build-up of a

new organisation in Utrecht. The committee is actively

involved in the further streamlining of the organisation and

the appointment of the four functional directors. As per 1

April 2011 EBN’s Executive Board consists of Mr Jan Dirk

Bokhoven (chairman), Mrs Maxine Tillij (director corporate

affairs) and Messrs Thijs Starink (director asset manage-

ment), Jan Boekelman (director finance) and Berend

Scheffers (director technology).

Financial statements

The Supervisory Board reviewed the annual report, the

financial statements and the report by the auditors of Ernst

& Young. The board can accept these and recommends

that the General Meeting of Shareholders should adopt

the financial statements accordingly.

Supervisory Board, Utrecht, 21 March 2012

signed by R.M.J. van der Meer (chairman)

signed by A.H.P. Gratama van Andel

signed by G-J. Kramer

signed by H.M.C.M. van Oorschot

In 2011, the board met four times. The members of the board were all present

at all meetings.

rEport by thE supErvisory boArd

Schedule for resignation by rotationDate of first appointment

Date of reappointment

End of 4-year term

Ir. R.M.J. van der Meer 1 January 2006 2009 2013

Drs. A.H.P. Gratama van Andel 1 January 2006 2009 2013

Ir. G-J. Kramer 1 January 2006 2010 2014

Mr. H.M.C.M. van Oorschot 1 January 2006 2010 2014


rEport by thE ExEcutivE boArd 2


Looking back at 2011In the area of operations, EBN amply surpassed the

number of planned exploration and appraisal wells. Gas

production from small fields trailed far behind the forecast

due to production problems at 1 platform with a significant

effect on total production. Total investments amounted to

less than expected due to the postponement of invest-

ments in storage projects in particular. EBN has formu-

lated a new vision and mission and divided it into three

strategic pillars.

Participation in licencesAs at 31 December 2011 EBN was participating in 125

production licences (24 onshore and 101 offshore) and

47 exploration licences (5 onshore and 42 offshore), in 4

pipelines, 4 gas storage facilities, the gas purification plant

in Emmen, the K-13 gas treatment installation in Den Hel-

der and in the wholesale company GasTerra B.V. In 2011,

4 new collaborations were started in exploration and also

4 were terminated. A total of 5 exploration licences were

relinquished and 1 joint venture was changed from explo-

ration to production. Three production collaborations were

terminated because the licence was returned.

Portfolio of gas and oil fieldsThe total number of productive gas and oil fields in the

Netherlands in which EBN participates is 258, of which

255 fields produce gas and 3 produce oil. In 2011 EBN

invested in both maintaining and expanding existing

production from 244 gas fields and 2 oil fields. Additionally,

11 new gas fields and 1 new oil field (Schoonebeek) were

commissioned. All these fields were taken in production

during 2011. The biggest and most important projects

EBN is investing in at the moment are the redevelopment

of the Schoonebeek oil field and the construction of the

Bergermeer gas storage facility.

Capital expenditureCapital expenditure in joint ventures in which EBN par-

ticipates amounted to EUR 611 million in 2011. This is

approximately the same level as in 2010. EBN invested

EUR 148 million in exploration and appraisal wells, EUR

140 million in production wells and EUR 323 million in

construction operations.

rEport by thE ExEcutivE boArd

Projects 2011By project type

• Enhanced gas rec

• Field development

• Gas storage

• Seismic

• Drilled well

• Abandoned well

2011 2010

Explorationactivities

140

323

total 611 total 607

148

Productionwells

700

525

350

175

0

Capital expenditure ( in EUR mln )

Constructionoperations

152

138

317

EBN concluded the year in 2011 with good financial results: sales amounted

to EUR 7.103 billion and the net profit and payments to the Dutch State

amounted to EUR 5.788 billion.


WellsThe number of completed wells in 2011 was 19. In total,

13 wells showed the presence of gas, 4 wells were dry,

2 showed quantities of hydrocarbons that are currently not

eligible for extraction from an economic point of view. The

total number of completed wells (exploration, appraisal

and production) was 57: exploration and appraisal 19,

production 38 (including Schoonebeek).

2011 total gas/oil dry/sub-economic

Exploration wells 19 11/2 4/2

Production wells 38 15/22 1

New fields in development 12 11/1 N/A

Production and reservesGas production from the Groningen field exceeded 46

billion m3 in 2011. Production from the small fields amoun-

ted to more than 27 billion m3. A total of more than 74

billion m3 of gas was produced, of which 1.2 billion m3

was injected into underground gas storage facilities. Net

production therefore amounted to 73 billion m3. EBN’s net

gas production is 30 billion m3 and its net oil production

amounted 1.2 million barrels.

In determining its reserves, EBN applies the definitions laid

down in 2007 in the Petroleum Resources Management

System. As at 31 December 2011 gas reserves (on a

100% field basis) in the fields in which EBN participates

amounted to 1,065 billion m3 (GE), of which EBN’s share

is 431 billion m3. This is a decrease of almost 74 billion m3

compared to the previous year.

SalesUnder the influence of the worldwide economic recovery,

the Dated Brent price was already in an uptrend at the be-

ginning of 2011. The outbreak of the civil war in Libya and

the unrest in other oil-producing countries in the Middle

East enhanced that trend. These developments resulted in

a peak of the Dated Brent price of USD 125/barrel in April

2011.

As a result of concerns regarding European and US public

debt and the consequential decline in economic confi-

dence, in the last three quarters of 2011 oil prices then fell

slightly to USD 110/barrel.

The spot prices for gas have been highly volatile for some

time now and 2011 proved no exception. As a result of lin-

king the Normative Buying Price (NBP, the price GasTerra

pays for gas from small fields) to oil and gas spot prices

and the various delaying factors, the NBP rose from EUR

22.5/MWh at the beginning of 2011 to more than EUR 26/

MWH at the end of the year. Despite lower production le-

vels in 2011 in relation to 2010, EBN’s turnover increased

in 2011 due to price effects.

Result for the yearWith annual sales of EUR 7,103 billion, in relation to 2010

the result grew by EUR 617 million (10%). The rise in sales

was chiefly due to higher sales prices (22%) even though

gas sales were lower (-9%). Sales volumes for oil and gas

condensate were lower than in 2010, but were compen-

sated for by higher oil prices. The net profit amounted to

EUR 2,131 billion.

Operational costs amounted to EUR 658 million, 5% more

than in 2010. Total payments to the Dutch State, including

taxes, amounted to EUR 5,788 billion.

FinancingIn October, EBN issued new bonds in Swiss Francs with

a total value of EUR 416 million; one tranche of CHF 350

million with a maturity of 5 years and one tranche of CHF

150 million with a maturity of 12 years. All-in cost amoun-

ted -after conversion of the proceeds into euros and miti-

gating interest and currency risks- 2.281% for the five-year

tranche and 3.385% for the twelve-year tranche. Bonds

were issued primarily to finance capital expenditure.

30/30 ambition: activity plansIn 2010 EBN formulated seven activity plans. Those plans

outlined the steps necessary to develop the additional

reserves in the Dutch subsurface and therefore contribute

to the 30/30 ambition, the ambition to produce 30 billion

cubic metres of gas annually from small fields by 2030.

These steps can concern the achievement of technical,

commercial, legal or organisational preconditions.

Project: NorgThe Groningen gas field has played an important part

in gas supply in the Netherlands since the 1960s. Due

to the gradual reduction in pressure in this gas field

measures are needed to supply sufficient gas during

peak demand as well. At the end of the 1990s several

underground gas storage facilities like the Norg facility

in Langelo were constructed. Some of the gas produ-

ced in the Groningen field is stored in the Norg storage

facility in the summer. In the winter, when the demand

for gas increases sharply (peak demand), gas from

Norg can be used to supplement supply. In order to

meet the increasing demand, and considering the decli-

ning pressure in the Groningen field, the capacity of the

Norg gas storage facility will be increased.

After the proposed expansion, which was started at

the end of 2011, the Norg underground storage facility

will be able to produce 80 million cubic metres of

gas a day. At the moment, it can produce 50 million

cubic metres. Storing gas in the Dutch subsurface fits

perfectly into EBN’s objectives of making optimal use

of the Dutch subsurface. EBN therefore has a 40%

interest in this storage facility. NAM is the operator

responsible for daily management.

Facts and figures on the Norg gas storage facility

— Storage of low-calorie gas for household use

— Reservoir at a depth of 3,000 metres

— 6 gas wells from the beginning, extra wells planned

— 2 production installations for drying gas

— Production capacity of 50 to 80 million m3 a day

— Injection capacity of 30 to 45 million m3 a day

— Compressor capacity of 2 to 3 times 39 Megawatt

2011 2010

Net profit

2.964

693

2.131

MOR+SA

6.000

4.500

3.000

1.500

0

Payments to the State ( in EUR mln )

VPB

2.076

2.571

692

total 5.339total 5.788


Working programmes have been formulated for the

following seven objectives:

— Exploration — Stranded fields

— End-of-field-life — Tight gas

— Shallow gas — Infrastructure

— Shale gas

Exploration activities plan

Six exploration workshops were held with operators in

2011. The objective of those workshops was to gain clear

insight into what current operators estimate the explora-

tion potential in the Netherlands to be. This information

has been used to update EBN’s exploration database. The

3D seismic study in the northern sector of the Dutch North

Sea (D, E, and F blocks) was largely completed in 2011.

In 2011 EBN, TNO and the Dutch Ministry of Economic

Affairs, Agriculture and Innovation jointly took part in the

Prospex Fair in London. To achieve the 30/30 objective,

it is important for exploration activities to increase in the

Netherlands. The two-day tradeshow proved an excellent

opportunity for drawing international oil and gas compa-

nies’ attention to the potential of the Dutch subsurface.

Stranded fields activities plan

In 2011 an overview was compiled of proven gas fields for

which there are no development plans, yet the so-called

stranded fields. It was concluded that the major causes

are: Reservoir rock insufficiently permeable, deposits too

small, deposits too far from infrastructure, unfavourable

gas composition and fiscal conditions.

End-of-field-life (EOFL) activities plan

In 2011, research into end-of-field-life technology focused

primarily on analysing the portfolio. EBN sent a question-

naire to operators to help clarify the stumbling blocks. The

findings of this survey were reported in the great Gas Well

Deliquification Workshop Groningen 2011.

Tight reservoir activities plan

Reservoirs with low permeability, making gas production

difficult, were surveyed in 2011. This information was used

to carry out simulations that provide good insight into the

value of this part of the portfolio. Moreover, the results can

be used to quantify the value that can be generated with a

possible breakthrough in production techniques.

Shallow reservoir activities plan

A start was recently made on analysing the bright spots,

describing the deposits with proven gas in shallow sands,

the shallow gas product, and quantifying possible gas

volumes. In the meantime, various new shallow gas pros-

pects have been identified and clearly described.

Infrastructure activities plan

A number of scenarios have been formulated for the

dismantling date for all offshore gas production installati-

ons on the Continental Plate. Based on the analysis, an

urgency list has been drawn up including areas for atten-

tion. This provides EBN with a good basis for consulting

with operators concerning their end-of-field-life strategy.

EBN’s objective is to ensure that no platforms are removed

without a thorough analysis of the residual potential.

Shale reservoir activities plan

The subject of shale gas became highly topical in the

Netherlands in 2011 with Cuadrilla Resources B.V.’s drilling

plans. There proved to be a great need for information in

the area amongst a broad public, including members of

parliament, local councils and, certainly, the local popula-

tion. By sharing information with the various stakeholders,

EBN aims to make a positive contribution to information

and discussion on the topic. Parallel to this, research

(with knowledge institutes and students, for example) will

continue in the area of rock mechanics and optimal field

development.

Gas HubThe Dutch government’s Gas Hub strategy is aimed at

positioning the Netherlands as the hub in the international

gas flows and as a distribution centre for gas in northwest

Europe based on the following considerations:

— Securing the gas supply and delivery

— Exploiting the national gas resource to the maximum

— Using and expanding the Netherlands’ high-quality

knowledge, expertise and experience in the area of gas.

From the point of view of its public task as a participant in

onshore and offshore exploration and production activities,

EBN is closely involved in the Gas Hub strategy. The maxi-

mum exploitation of the gas in Dutch territory (the Gronin-

gen field and the small fields) is one of the major policy acti-

ons the government has formulated within the framework

of the Gas Hub strategy. EBN’s 30/30 ambition (producing

30 billion cubic metres of gas from the small fields annually

by 2030) fits in with this perfectly. As part of the Gas Hub

Consultation Platform, EBN actively participated in the wor-

king groups ‘The Dutch Mining Climate’ and ‘A shared gas

communications strategy during 2011’ and was chairman

of the working group ‘Technology Enablers’. The Minister

of Economic Affairs, Agriculture and Innovation reported to

the Lower Chamber of Dutch parliament on the progress of

the Gas Hub in November 2011. You can read more about

the Gas Hub at www.gasrotonde.nl

Project: SchoonebeekIn January 2011, in collaboration with EBN, NAM started new oil production in the Schoonebeek oil field. In the mid-1990s,

oil production was stopped because the techniques at the time were no longer profitable. A study showed, however, that it

was technically and economically feasible to recommence oil production. Consequentially, in January 2009 NAM and EBN

returned to Schoonebeek to redevelop the oil field. New techniques are being used, such as horizontal wells combined with

low-pressure steam injection and high-efficiency pumps. NAM is the operator and therefore responsible for the oil production.

EBN has a 40% participation in this concession.

Project: BergermeerThe Dutch government has expressed the ambition

to become the gas hub for northwest Europe. Suf-

ficient storage capacity will be needed to achieve this

ambition. Due to the gradual reduction in pressure in

the Groningen gas field measures are also needed to

supply sufficient gas during peak demand as well.

EBN feels there are opportunities for using the Ber-

germeer gas field for storing gas to ensure the supply

reliability of gas, now and in the future. That gas

storage facility is an excellent example of optimally

using Dutch subsurface. As operator, TAQA Energy is

EBN’s partner in this project and responsible for the

daily management of the gas storage facility. EBN has

a 40% interest.


Social importanceEBN sees social responsible business as an integral part

of its activities. This is reflected in such areas as:

— Developing and using knowledge;

— Interaction with stakeholders;

— Care for personnel.

To follow the economic, social and environmental aspects

of its operational management and operational activities

EBN has formulated KPIs. At www.ebn.nl we report on

a number of those KPIs. This online reporting will be ex-

panded in the course of 2012. The KPIs have partly been

established on the basis of general GRI guidelines and

those guidelines specific to the oil and gas industry.

Developing and using knowledge

EBN has a crucial role in developing and using knowledge

and making it accessible for the Dutch the oil and gas

industry and for the government. EBN is keen to extend

this role to further concretise our social involvement with

all our stakeholders. EBN regularly provides students with

the possibility of support in writing their theses. In 2011

four students graduated on the basis of research projects

set up together with EBN. In 2011, in collaboration with

the Delft University Fund, EBN initiated the annual Geo

Energy Award Thesis Prize for the best thesis in the field of

innovative technology for oil and gas production. The prize

was awarded for the first time in 2011.

We also support organisations and events that contribute

to the development and distribution of knowledge on oil

and gas production in the Netherlands. We participate in

the Clingendael International Energy Programme, a think

tank for geopolitical issues, and the Energy Delta Institute,

a training and knowledge institute for the gas industry.

In 2011 EBN employees spoke on diverse stages nati-

onally and internationally, sharing EBN’s knowledge and

experience. In 2011 EBN personnel gave 32 lectures on

topics such as the mining climate in the Netherlands, the

production of gas from small fields and the importance of

gas in the Netherlands’ total energy supply.

Joint Industry Projects

JIP studies are being carried out by research institutes and

universities, some in collaboration with other (market) par-

ties. Joint Industry Projects are a good example of EBN’s

involvement in knowledge development. In 2011 EBN

participated in the following 10 research projects.

Joint Industry Projects

study research institute

Carbon TNO

Shallow gas (potential in The Netherlands) TNO

Deliquification of gas wells TNO

PetGas (petrophysics) Leeds University

Post fracture Clean-up Frac Technology

Ten Boer (reservoir architecture) TU Delft

Living North Sea initiative IMSA

Techno-economic Assessment of Water Management Solutions Gas Technology Institute

Gas-to-wire NOGEPA

Brabant-wide geothermics (the geothermal potential in Brabant) Brabant-wide coalition

Relationships with our stakeholders

At EBN, we consider constructive dialogue with our major

stakeholders essential for carrying out our activities ef-

ficiently and responsibly. The exchange of information and

“Using gas is the natural choice”.

jAN dirK boKhovEN:


views enhances our ability to make the right decisions for

responsible operational management.

The Dutch society is a crucial factor when it comes to

public acceptance of exploration for and production from

new gas fields. The social dynamics concerning the gas

storage facility in Bergermeer and the appraisal wells for

shale gas in Boxtel, for example, illustrate the importance

of seriously discussing concerns regarding such projects.

It is important to discuss the possible risks and wor-

ries in the context of the sixty years of experience of gas

production from the Dutch subsurface, the excellent safety

requirements in the Netherlands and the important role

of gas as a relatively clean fossil fuel in the transition to

sustainable energy forms. EBN feels it has a major role

in promoting social support for oil and gas production

through providing information and dialogue.

The people of EBNIn the view of the social importance of EBN’s activities,

talented, motivated personnel are essential for correctly

fulfilling our role in the energy chain in the Netherlands

and for the continuity of our organisation. EBN’s person-

nel policy sets itself the task of attracting, motivating and

retaining the right professionals. We are keen to retain our

employees, by offering them challenging work and deve-

loping their knowledge and skills alongside developments

at EBN.

Workforce

At the end of 2011 EBN had 68 employees, 19 of whom

were part-timers. We also had 6 seconded employees.

The percentage of female employees is 31%, a slight drop

in relation to 2010. The average age of our employees is

42.7 years and 63% of employees are below the age of 45.

Training

At EBN we attach a great deal of importance to employ-

ees’ development and growth. In principle, every employee

has a development plan. That plan has two objectives:

personal – structured planning of individual development

– and company-oriented – creating a solid basis for filling

key positions. The development plan covers a period of

three to four years and is evaluated annually. In 2011, we

spent an average of 48 hours per employee on training, a

total of 417 training days.

Educational level of EBN employees in 2011:

University: 47 Higher Professional Education: 8

Intermediate Professional Education: 13

EBN Academy

In 2010, EBN started setting up its own EBN Academy.

The objective of the EBN Academy is to enable employees

to execute their development plans. The EBN Academy

offers employees a range of courses. Some are courses

with a professional content, but the EBN Academy also fo-

cuses on developing competency and gaining knowledge.

In 2011, a training pool was added to the EBN Academy.

New graduates joining EBN are offered a training program-

me for a period of three years.

Health and safety

In 2011, 55 of the 62 EBN employees at the time volunta-

rily took part in the periodic medical survey (PMS). Based

on the results of a risk assesment associated with safety

in the workplace conducted in 2010, EBN, wich was de-

voted specific attention to the health risks of working long

hours behind a screen. Additionally, a Health Check was

carried out in 2011 amongst 52 employees, focusing on

general physical condition and vitality.

At year-end 2011, the EBN emergency response team

had 6 members and one evacuation exercise was carried

out. There were no safety incidents in 2011.

Absenteeism

Absenteeism remained constant in 2011 at 4.1%. In 2011,

EBN introduced an active reintegration policy. Non-current

absenteeism fell slightly to 2.8%. Short-term absenteeism

rose slightly to 1.3%. EBN aims to keep short-term absen-

teeism below 2.5%.

Absenteeism in % 2011 2010

Short-term absenteeism 1.3 1.1

Non-current absenteeism 2.8 3.0

Total 4.1 4.1

One employee suffering from protracted illness was fully

reintegrated in 2011. EBN also assisted another organisa-

tion with the full reintegration into the work process of an

employee who had been ill for a long period of time (and

for whom no suitable work was available).

Project: North BrabantIn 2009, Brabant Resources, a subsidiary of Cuadrilla

Resources Nederland, obtained a licence from the

Ministry of Economic Affairs, Agriculture and Innovation

(EA&I) for exploring for gas in shale in North Brabant.

EBN commissioned TNO to conduct a large-scale

survey in 2009 into the potential for gas from shale in

the Dutch subsurface. Based on the results, EBN feels

there are possibilities for production and is therefore

investing in further exploration. Exploratory drilling

should show whether extracting gas from shale is eco-

nomically feasible in the Netherlands. There are con-

cerns for risks to public health and the environment,

which has generated resistance to the proposed drilling

in Boxtel and Haaren. In November 2011 Maxime

Verhagen (Minister of EA&I) announced an independent

inquiry into the risks of shale gas for public health and

the environment. EBN supports that choice because

safe, responsible business has to be the focus of all

mining activities.

Project: Q16-MaasveldOne of the objectives of both the Dutch government

and EBN is to produce as much gas as possible from

small fields. The development of the Q16-Maas gas

field is an excellent example of successful exploration

of a small gas field. The exploratory drilling in 2011 by

operator Oranje-Nassau Energie (ONE) again showed

that safe, responsible drilling for gas onshore, in con-

sultation with all stakeholders, is quite feasible. In June

2011, ONE started exploratory drilling from the Meuse

Plain to the Q16-Maas gas reservoir. The reservoir is

three kilometres to the northwest of the Meuse Plain at

a depth of roughly two and a half kilometres below the

North Sea.

The first gas was discovered in August 2001. In the

meantime, the gas field has been thoroughly explored

and evaluated. The conclusion is that there is enough

gas present to develop the field, with a total expected

production of 820 million m3 of gas. That amount of

gas is sufficient to supply a city the size of Apeldoorn

with gas for a period of eight years. EBN’s share in this

gas field (40%) will generate an estimated contribution

to Dutch society of EUR 100 million over the economic

lifespan the field.


Core values

In 2011, in consultation with the personnel, the Executive

Board formulated EBN’s core values. The core values were

discussed and evaluated with the entire organisation and

incorporated into the amended code of conduct that

comes into force in 2012. You can find the code of

conduct at www.ebn.nl

Works Council

Duing 2011 periodic consultation between the board and

the works council took place four times. There was also

informal consultation. The major topics discussed in 2011

were:

— Amendments to the articles of association as a result

of the new management structure;

— Results of EBN’s personnel satisfaction survey and

the culture day;

— Amendment of the salary indexation method;

— Amendment of the regulations protecting whistle-

blowers;

— Amendment to the target and remuneration cycle.

The Works Council had four members: Martin Boubin,

Jeroen Piket (chairman), Ruben Swart, and Edmund Wel-

lenstein (secretary). The Work Council’s term of office runs

until 31 December 2013.

Outlook

Forecast for 2012

The gas market has been turbulent since the outbreak

of the crisis in 2008. Seasonal influences combined with

the normal supply and demand mechanism determine a

basic price in the gas markets. The environmental disaster

in Japan and the subsequent decision regarding nuclear

energy in Europe, a possible second world recession,

uncertainties in the stock markets and uncertainty in the

Eurozone, have resulted in substantial price fluctuations

in the gas market. EBN expects that gas sales in 2012

will be similar to those in 2011. Now that production has

started at Schoonebeek, EBN’s oil production is expected

to increase to 2.5 million barrels in 2012. Sales and result

are expected to remain approximately constant. Explora-

tion and production activities will again attain a high level

in 2012. EBN expects the number of participations to rise

towards 200. The total capital expenditure level will be

comparable with the expenditure made in 2011.

The total amount of capital expenditure in the participa-

tions will amount to roughly EUR 1.5 billion in 2012, of

which EBN’s share amounts to EUR 730 million. This will

entail full or partial drilling of 19 exploration wells and 28

production wells. Further EBN is developing 15 fields. Of

those fields, 10 are expected to be taken into production

in 2012. We do not expect any fields to be abandoned in

2012.

In 2012, time and attention will be devoted to implementing

the revised strategy. Management has detailed a number of

strategic initiatives that will be further concretised in 2012.

These will focus on maintaining or improving the produc-

tion level of the producing fields and adding new reserves

as a result of exploration activities and developing new

fields. EBN will develop an increasing number of initiatives

to secure gas production for the Netherlands in the mid to

long term.

The Dutch Council of State is expected to make a state-

ment in April 2012 on the Bergermeer project and the

construction work is expected to start in August 2012.

Forecast for 2013 - 2017

According to the current forecasts, production of gas from

small fields will decrease from 27 to 22 billion m3 in the

period between 2013 and 2017.

That decrease will have to be compensated for with the

production of gas from small fields which have previously

been considered to be sub-economic, such as tight and

shallow reservoirs. In this way, the first concrete results

of our 30/30 ambition will become evident in the period

between 2013 and 2017.

During that period, EBN will continue devoting attention

to analysing the future energy landscape and the role

of gas therein. It is EBN’s aim to create coalitions where

the synergy effects between gas and sustainable energy

sources such as wind, sun, geothermics and biogas are

maximised.

signed by

J.D. Bokhoven


corporAtE govErNANcE ANd risK mANAgEmENt 3


Corporate Governance

Shareholder

EBN is a private limited company with limited liability

with the Dutch State as it sole shareholder. All shares are

owned by the Ministry of Economic Affairs, Agriculture and

Innovation. One shareholder’s meeting was held in 2011.

In addition, the ministry regularly informally conferse with

EBN.

The shareholder appoints EBN’s Executive Board and

Supervisory Board. EBN’s articles of association also state

that the board requires approval from the shareholder for

certain decisions, for example entering into or terminating

any sustainable joint venture or investment with a value

exceeding EUR 200 million.

Supervisory Board

The chairman of the Supervisory Board is appointed by

the shareholder. The board is responsible for supervising

the Executive Board’s policy, the general course of af-

fairs within EBN and advises the Executive Board where

necessary. EBN’s Executive Board, in turn, provides all the

necessary information to the Supervisory Board. Also refer

to the report of the Supervisory Board on page 11 of this

report.

Executive Board

The Executive Board comprises one statutory director.

The Executive Board is responsible for general policy and

EBN’s strategy and business. Where necessary, the board

submits decisions to the shareholder or the Supervisory

Board for approval. The Executive Board is also respon-

corporAtE govErNANcE ANd risK mANAgEmENt

Chief Executive Officer

HR

DirectorCorporate Affairs

DirectorFinance

DirectorTechnology

Director AssetManagement

Commercial Legal BusinessControl

TechnologySupport

E&P AssetGroups A,B,C

CorporateSecretary

Accounting& Reporting

Roadmaps& ResourcesGasgebouw

Corporate Development TreasuryExploration

ICT

Organisational structure


sible for ensuring the proper functioning of the internal

risk-management and control system, on which we report

in the next section of this report. The Executive Board is

assisted by four functional directors. Together with the

functional directors they constitute the management team.

The Executive Board Regulations, which are approved

by the Supervisory Board, divide the duties among the

members of the Executive Board. In principle, the

Executive Board meets twice a week.

The shareholder determines the policy on the Executive

Board remuneration. The Supervisory Board determines

the remuneration of the individual members of the Execu-

tive Board.

Mr J.W.P.M. Haenen (Commercial Director) resigned as

of 1 January 2011. Mr D.G. Roest (Financial Director)

resigned as of 31 March 2011. From 1 April 2011, the

management team comprises Mr Jan Dirk Bokhoven

(chairman), Mrs Maxine Tillij (Director Corporate Affairs),

Mr Thijs Starink (Director Asset Management),

Mr Jan Boekelman (Director Finance) and Mr Berend

Scheffers (Director Technology).

External auditors

The shareholder is responsible for appointing the external

auditors, with the Supervisory Board having a right of

nomination. Ernst & Young were appointed to audit the

financial statements for the years 2009, 2010 and 2011.

Code of conduct and regulations

protecting whistleblowers

EBN also values clarity and transparency within its own

organisation. It has consequently adopted a code of con-

duct applying to all its employees. The code of conduct

is intended to guide choices made and decisions taken.

We also use the code of conduct as a means of assessing

conduct, both of the company and of individual employees.

Individual employees who have complaints can contact

a confidential advisor or the complaints committee.

Under the regulations designed to protect whistleblowers,

employees may report alleged cases of abuse or impro-

per conduct within the company to the chairman of the

Executive Board or the Supervisory Board. In 2011, one

incident relating to the regulations for protecting whistle-

blowers was reported and dealt with in accordance with

the regulations. The full code of conduct and regulations

protecting whistleblowers are available at www.ebn.nl

Application of the Corporate

Governance Code

As EBN is qualifies as a State Participation, EBN follows

the government’s policy that stipulates that state participa-

tions follow the Corporate Governance Code. As EBN is

not a listed company it is not required to apply the code.

EBN does, however, endorse the Corporate Government

Code principle that transparency towards stakeholders is

crucial and we do follow a number of the code’s principles.

This does not apply to all the best practice provisions

included in these principles as most of them are not appli-

cable to EBN. The following principles and best practices

have been elaborated upon in EBN’s articles of association

and regulations and are a conduct guideline for the Exe-

cutive Board, the Supervisory Board and the shareholder.

The full Corporate Governance Code is available at

www.ebn.nl

Risk managementEBN’s aim is a solid risk management structure, with

the focus on opportunities. We are convinced that risk

management not only supports the right structure but also

that integrity and good risk awareness in the organisation

are highly important.

Risk management structure

EBN applies a risk management structure comprising nine

materials that together form a solid foundation. That struc-

ture is built up around the following activities:

— Analysing opportunities and risks based on the

organisation’s strategy;

— Formulating and implementing management

regulations;

— Securing the functioning of the management measures.

Analysing opportunities and risks

A strategic risk analysis is carried out annually. Based on

the organisation’s strategic objectives both the opportuni-

ties and the risks are analysed. Each individual department

also conducts operational risk analyses. On this basis, an

assessment is made of the degree to which opportunities

can be sufficiently identified and grasped. An evaluation is

also made of the extent to which risks are managed. This

analysis also took place in 2011.

Formulating and implementing

management regulations

Based on the risk analyses, management measures are

added or improved where necessary. These management

measures are imbedded in the work processes. All impor-

tant work processes are described and recorded centrally.

These are accessible to all employees via an intranet ap-

plication (the ‘Integral Management System’).

Organisational management reports are formulated

monthly at various levels, which indicate the degree to

which the objectives proposed in the working programme

and budget are actually being achieved. These reports

are discussed at management level. The key performance

indicators are discussed with the Executive Board via a

management dashboard. Where necessary, appropriate

actions are taken based on these reports.

The functioning of management measures

Each department carries out an annual self evaluation

through informal sessions in which the department mana-

ger discusses the organisation and functioning of the ma-

nagement measures with the personnel. Where necessary,

actions are defined for improving the level of control. The

results are discussed with the Executive Board annually.

These self-analyses also took place in 2011.

A number of processes are also audited internally each

year. In 2011 these internal audits were further professio-

nalised by having them conducted by external specialists.

The findings of the internal audits are presented to the

Executive Board. The internal audits in 2011 did not result

in the requirement of any action in the very short term.

Each finding did, however, lead to establishing an action to

be implemented. An action owner was appointed for each

action and an end date defined. The implementation of the

actions is monitored periodically.

The Audit Committee also discussed the most impor-

tant findings with the Supervisory Board. Each year, the

department managers sign an ‘in control statement’. The

managers were also required to provide this statement in

2011. In that statement, they indicate the degree to which

the major risks in their area of responsibility had been iden-

tified and the extent to which they are being controlled.

1 EBN complies with the following principles of the Corporate Governance Code: II.1 (Executive Board: role and procedures), II.3 (Executive Board: conflicts of interest), III.1 (Supervisory Board: role and procedures), III.2 (Supervisory Board: independence), III.3 (Supervisory Board: expertise and composition), III.4 (Supervisory Board: roles of the chairman of the Supervisory Board and the company secretary), III.5 (Supervisory Board: composition and roles of the three key Supervisory Board committees), III.6 (Supervisory Board: conflicts of interest), III.7 (Supervisory Board: remuneration), V.1 (Financial reporting), V.2 (Role, appoint-ment, remuneration and evaluation of the performance of the external auditors), V.3 and V.4 (External auditors’ relationship and communications with company bodies.


Risk management

Using financial instruments as a means of covering

financial risks can itself create risks. In accordance with

the requirements of Book 2, Article 391, paragraph 3 of

the Dutch Civil Code, the objectives and policy of risk

management are discussed in the annual report insofar

as they relate to the use of financial instruments and the

management of these risks. In accordance with Book

2, Article 391, paragraph 1 of the Dutch Civil Code the

annual report provides information on the objectives and

the policy of the legal person and the group companies

included in the legal person’s financial statements.

Attention must in any event be paid to the policy with

regard to covering risks associated with all significant

types of transactions contemplated. Attention must also

be devoted to the price, credit, liquidity and cash flow risks

to which the legal person and the group companies are

exposed (Dutch Accounting Standards Board 400.111).

A more detailed explanation can be found in the financial

statements from page 68 onwards.

Risk profile

The risk categories mentioned below constitute significant

threats to the realisation of our strategic objectives:

— Support for gas and oil production

It is essential for gas and oil production to have sufficient

support from society. There is, however, a risk that social

acceptance of gas and oil production is declining. EBN

is managing this risk through clear communication on

the importance of gas for the Netherlands and factual

communication on related activities. Essential here is the

transparency of what we do and how we work.

— Investment climate

Oil and gas companies have the choice between investing

in gas and oil production in the Netherlands and abroad.

When the investment climate is unfavourable for gas and

oil production oil companies are more inclined to relocate

their activities abroad, making it difficult for the Nether-

lands to attract the right new parties. This generates the

risk of exploration and gas and oil production in the Dutch

subsurface trailing behind and the deployment of innova-

tive technology shifting to other parts of the world. A good

investment climate for gas and oil production is needed

to prevent that. EBN is participating in a working group

aimed at improving the investment climate, together with

the government, knowledge institutions and suppliers.

— Infrastructure

It is important for critical infrastructure to be maintained

as long as possible, as it is essential for the development

of new areas with exploration and production potential.

EBN is limiting that risk by creating a good overview of

the expected future developments in infrastructure and

deploying that overview in actively managing those deve-

lopments within the joint ventures.

— External factors

Low market prices for prolonged periods could result in

fewer investments by E&P companies. EBN continually

monitors gas prices in order, if necessary, to be able to

adapt its strategy. EBN does not use tools such as hed-

ging to manage the risks of fluctuating market prices. Its

low operating cost structure mean that low market prices

have little effect on EBN’s continuity.

Executive Board statement of responsibilities

The Executive Board is responsible for proper internal risk

management and for evaluating the effectiveness of rela-

ted control environment. Actual business performance in

the financial year is periodically compared with approved

plans and budgets and discussed during the Executive

Board meetings. The Executive Board declares that the

financial reporting systems operated properly during the

year under review and provide a reasonable degree of

assurance that the financial statements do not contain

any material missstatements.


fiNANciAl stAtEmENts 4


The Executive Board has prepared and, by resolution of

21 March 2012, formally approved the financial state-

ments of EBN B.V. (EBN) for the 2011 financial year. The

financial statements were subsequently submitted to

the Supervisory Board.

EBN is a private limited company with limited liability,

based and with its business premises in the Netherlands

and with its registered office in Utrecht. EBN was establis-

hed on 2 January 1973 in Maastricht. Pursuant to Article

20.2 of the articles of association the Supervisory Board

provides a preliminary recommendation to the share-

holders. The financial statements will subsequently be

submitted to the General Meeting of Shareholders on 11

April 2012, where they will be adopted and subsequently

published. All shares in EBN are held by the Dutch State.

The consolidated financial statements of EBN for the 2011

financial year include the company and its subsidiaries

K13 Extensie Beheer B.V. and F3/A6 Extensie B.V. The

financial statements have been prepared in accordance

with the International Financial Reporting Standards (IFRS)

and interpretations of the International Financial Repor-

ting Interpretations Committee (IFRIC) as effective on 31

December 2011 and as accepted for application within

the European Union and section 9, Book 2 of the Dutch

civil code.

The consolidated financial statements incorporate the

financial statements of EBN and the entities over which

EBN has control. EBN has control over a subsidiary if EBN

is able to determine the subsidiary’s financial policy and

corporate policy in order to obtain benefit from its activi-

ties. The subsidiary’s financial statements are compiled

on the basis of the same principles as EBN.

All transactions, balances, assets and liabilities within the

Group are eliminated in the consolidation. The results of

the subsidiaries acquired or disposed during the year are

included in the consolidated profit and loss account from

the date of acquisition or until the date of, respectively,

acquisition or disposal.

The financial statements of EBN pertain mainly to EBN’s

share in joint ventures in the field of oil and gas production

in the Netherlands and the Dutch part of the continental

shelf. The information shown relates to EBN’s share in

the assets and liabilities, as well as in the revenues and

expenses of such joint ventures. EBN further participates

in a number of companies.

Joint venturesJoint ventures are defined as contractual or other com-

pany cooperation agreements with partners with whom

EBN jointly performs operations. These operations use

assets that are jointly controlled by EBN and its partners.

EBN accounts proportionally for these joint assets and

related liabilities, expenses and revenues in the financial

statements.

The Maatschap Groningen [Groningen Partnership] is the

main joint venture. In total, EBN participates in 24 onshore

production licences, 101 offshore production licences, 47

exploration licences, the Emmen gas purification plant and

4 underground natural gas storage facilities. The participa-

tion percentages in these joint ventures range from 40%

to 50%. EBN also participates in the K13-Den Helder gas

processing plant and pipeline, the K13-Extension pipeline

(through a subsidiary) and the F3/A6 Extension pipeline

(through a subsidiary).

gENErAl

EBN holds 100% of the shares in K13 Extensie Beheer

B.V. and F3/A6 Extensie B.V. which are related to the

above participations in the K13 Extension and F3/A6

Extension pipelines.

AssociatesEBN has a 40% participation in GasTerra. B.V.. GasTerra

B.V. is based in Groningen and its core activity is trading in

gas. EBN further has a 45% participation in NOGAT B.V.

and a 12% participation in NGT Extensie. The core activity

of these organisations is gas transport from the North Sea.


The financial statements have been prepared in accor-

dance with the historical cost convention, unless stated

otherwise.

Conversion of foreign currenciesThe euro is the operating and reporting currency of EBN.

This also applies to its joint ventures. Commercial trans-

actions and borrowings in foreign currencies are shown

in the financial statements at the spot exchange rates

applying on the transaction dates. Balance sheet items

denominated in foreign currencies are converted at the

spot exchange rates applying on the balance sheet date.

Differences in exchange rates resulting from settlement of

these transactions and conversion of balance sheet items

are charged to the profit for the year.

Current versus non-current assets and liabilitiesAn asset is classed as current if it is expected to be rea-

lised within 12 months of the balance sheet date. A liability

or debt is classified as current if it will be settled within

12 months of the balance sheet date.

Property, plant and equipment

Exploration wells

Expenses for exploration wells are capitalised (wells under

construction). If an exploration well turns out to be dry,

the costs incurred are charged to comprehensive income.

These assets are not depreciated as long as there is no

production from a gas or oil exploration well.

Expenses related to exploration wells that are older than

12 months are charged to comprehensive income, unless:

— they are located in an area where significant capital ex-

penditure is required before production can commence

— commercially recoverable quantities have been found

— further exploration or appraisal activities are taking

place, i.e. additional exploration wells are being drilled

or there are definite plans to do this in the near future

The Executive Board regularly evaluates, on the basis of

the above criteria, whether it is still appropriate to capita-

lise expenses relating to exploration drilling, and whether

the drilling activities can be continued. Exploration wells

older than 12 months are additionally evaluated to deter-

mine whether any facts or circumstances have changed

and whether the above criteria still apply.

Reimbursement of partners

The costs of reimbursements paid to partners – mainly

exploration costs and interest payments related to proven

reserves – are capitalised and amortised on the basis of

the Unit-of-Production method (see next section for more

information).

Property, plant and equipment for production

Property, plant and equipment for the production of oil and

gas and other fixed assets are shown at cost less depreci-

ation and any impairment in value.

Replacement investments that constitute improvement are

capitalised, whereas identical replacement investments are

charged as an expense to comprehensive income.

The estimated costs of decommissioning, dismantling and

removal of platforms and other installations are capitalised

as part of the cost of the property, plant or equipment

concerned.

EBN capitalises expenditure on exploration. Expenditure

or the activities listed below is capitalised as part of the

exploration and evaluation assets: acquisition of explora-

AccouNtiNg policiEs

tion licences, exploration drilling, trenching (surveying by

means of soil sections), sampling and activities related to

evaluating the technical and commercial possibilities for

extracting minerals.

Reimbursement of partners

The costs of topographical, geological, geochemical and

geophysical surveys are not capitalised or amortized un-

less they relate to existing and proven reserves (to find out

the best place to drill, for example). If such costs are con-

sidered to be part of the partner reimbursement then they

are capitalised and amortised. Partner reimbursements

are generally made when production seems feasible. That

provides more certainty than in the event that the surveys

are carried out independently.

Property, plant and equipment for the production of oil and

gas are depreciated on the basis of the Unit-of-Production

(UoP) method: the ratio between the production in the

financial year and the PMRS reserve categorie proved

reserves as at 31 December of that financial year. These

reserves are determined in accordance with the definitions

laid down by Society of Petroleum Engineers (SPE), the

World Petroleum Council (WPC), the American Associa-

tion of Petroleum Geologists (AAPG) and the society of

Petroleum Evaluation Engineers (SPEE) in the Petroleum

Resources Management System. Reserves are based on

the current estimates of EBN’s proved reserves and pro-

duction profiles. Other property, plant and equipment are

depreciated on a straight-line basis over their estimated

useful economic life. For trunk transport pipelines and fa-

cilities for the underground storage of natural gas (UGSs),

an economic life of twenty years is initially estimated. For

buildings, an economic life of ten years is assumed. Land

is not depreciated. The estimated remaining economic life

of this property, plant and equipment is revised every year,

taking account of economic and technological obsoles-

cence and normal wear and tear.

A property, plant and equipment item is no longer included

in the balance sheet once it has been divested or when no

future economic benefits are expected from its further use

or in the event of surrender of the licence or sale of the

licence. Any gain or loss resulting from the property, plant

or equipment that is no longer included in the balance

sheet is charged to the statement of comprehensive

income.

Capital expenditure and wells under construction

Capital expenditure and wells under construction are not

depreciated.

Financing costs of projects

Since 1 January 2009, the financing costs of projects are

capitalised.

The interest rate used for the financial year is based on the

average interest rate applying on long-term borrowings in

the past financial year.


AssociatesAn associate is an interest in an entity on which EBN can

exert significant influence, but over which it cannot exer-

cise decisive control. Associates are shown in accordance

with the equity method. This means that EBN’s share in

an associate is shown as EBN’s share in the net assets of

this entity, less any impairment. EBN’s share in the profit or

loss of the associate is charged to comprehensive income.

If EBN’s share in the loss of an associate exceeds the

carrying amount of that associate, including any other

receivables, the carrying amount is reduced to nil. No

further losses are accounted for unless EBN has assu-

med responsibility for the associate through a guarantee

or other commitments. Unrealised gains and losses on

transactions with associates are eliminated in proportion to

EBN’s share in these associates.

ImpairmentAn assessment is made on each balance sheet date as to

whether the carrying amount of a non-current asset (pro-

perty, plant and equipment or associate) exceeds its reali-

sable value (the higher of the indirect and direct realisable

values). If so, the value of the asset will be deemed to be

impaired. If an asset does not generate sufficient indepen-

dent cash flow, the realisable value is determined for the

cash-generating unit to which the asset belongs. A typical

EBN property, plant and equipment type cash-generating

unit is a concession. To determine the indirect realisable

value, estimated future cash flows are discounted at a rate

before taxes, on the basis of the market interest rate, plus

a mark-up for the asset’s specific risks.

If the realisable value of an asset is lower than the car-

rying amount, the carrying amount will be reduced to

the realisable value. Impairment can be reversed, either

wholly or partially, in the event of a change in the estimate

that is of significance for determining the realisable value.

Impairment is shown as a separate item in the statement

of comprehensive income.

InventoriesInventories of gas stored underground and materials and

equipment are shown at the lower of average purchase

prices or net realisable values. Inventories of above-ground

condensate and oil are shown at their net realisable values

at the year-end.

ReceivablesReceivables are shown at amortised cost less any amount

deemed necessary for bad and doubtful debts. On first

recognition, receivables are shown at fair value.

Cash and cash equivalentsCash and cash equivalents are cash in hand, bank balan-

ces and deposits at banks with a remaining term to matu-

rity of less than three months. Amounts owed to banks are

shown as current liabilities.

Shareholder’s equityEBN’s shareholder’s equity consists of share capital and

any dividend declared. The Dutch State is EBN’s sole

shareholder. The dividend payable to this shareholder is

shown as a liability in the period for which it is due, in ac-

cordance with EBN’s articles of association. An exception

to this rule is made for the proposed final dividend, which

does not become a liability until it has been approved by

the General Meeting of Shareholders..

Provisions Provisions are shown in the balance sheet if the following

conditions are satisfied:

1 ) there is a legal or actual obligation as a consequence

of an event in the past;

2 ) it is likely that assets will be withdrawn from the com-

pany in order to meet this obligation and;

3 ) the amount of the obligation can be reliably estimated.

If the effect of the time value of money is material, provi-

sions are determined by calculating the present value of

the forecast cash flows at a discount rate before tax. Once

the present value has been calculated, any increase in

provisions as a result of the passing of time is shown as

interest expense. The provision for deferred tax liabilities is

not discounted.

The provision for decommissioning and restoration costs

is designed to cover the expected estimated costs of

decommissioning, dismantling, and land restoration on the

basis of present-day requirements, technology and price

estimates. The amount of this provision is based on infor-

mation provided to EBN by the operators. Any changes in

this information will, after EBN has made its own assess-

ment, generally result in a corresponding change in the

capitalisation of decommissioning and restoration costs of

the relevant property, plant and equipment. The provision

for ground subsidence is designed to cover certain additi-

onal liabilities arising during the production phase.

LiabilitiesOutstanding borrowings are shown at amortised cost. On

first recognition, such items are shown at fair value less

costs. Borrowings in foreign currencies are converted at

the exchange rates applying on the balance sheet date.

Premiums or discounts on borrowings are amortised

during the term to maturity of the loan concerned. Interest

expense is charged to the result in the period to which it

pertains, using the effective interest rate method.

PensionsEBN provides a defined benefit pension scheme, which is

managed as part of the ABP pension fund. In its financial

statements EBN treats the scheme as a defined contributi-

on pension scheme because the pension fund is unable to

provide the information required to determine and specify

EBN’s share in the underlying pension obligations, fund

investments and costs of the scheme in a consistent and

reliable manner.

Contingent assets and liabilities Contingent assets and liabilities are not shown in the

balance sheet.

Emission rightsAs a result of its interests in the various joint ventures,

EBN must comply with legislation designed to reduce

greenhouse gas emissions. The operator trades the

emission rights on behalf of the joint venture partners.

The operator reserves emission rights in order to be

able to satisfy delivery obligations. These rights are not

shown in the balance sheet. Income is reported when the

operator sells EBN’s share in surplus emission rights. If the

operator has to purchase additional emission rights, EBN

records an expense item to the extent of its share.

Net salesNet sales from the sale of gas, oil and condensate are

accounted for at the time of delivery, which is when


ownership of and the risks associated with the delivered

goods pass to the buyer. Revenues from oil and gas pro-

duction generated from assets in which EBN participates

with other producers are shown in proportion to EBN’s

relative interest in these assets.

Operating expensesExpenses are determined on the basis of historical costs.

These include the share in the expenses of the joint ven-

ture that corresponds with EBN’s interest, as well as the

costs of managing the joint venture. Operational costs

also include levies out to the Dutch State.

Financial income and expenseInterest income and interest expense are shown on a time-

proportionate basis. Interest expense also includes interest

accrued on provisions.

Share of profit from associates The share in the profit from associates is shown as the

share of the profit for the year under review corresponding

with EBN’s interest, after deduction of taxes.

TaxesTaxes on profits are determined in accordance with the

balance sheet method. Tax liabilities are specified in the

statement of comprehensive income except insofar as

they relate to an item included in other comprehensive

income.

Current tax expenses are taxes that are expected to be

payable on the taxable profit for the year, based on the tax

rates applying on the balance sheet date, net of any adjus-

tments for taxes payable in respect of previous years.

Deferred tax assets and liabilities are shown on the basis

of the expected fiscal consequences of temporary dif-

ferences between the fiscal and commercial carrying

amounts of assets and liabilities.

Deferred tax assets and liabilities are calculated on the

basis of the tax rates that are applicable or materially

determined on the balance sheet date, and in accordance

with the tax regulations expected to apply when the specific

deferred assets and liabilities are settled.

Financial derivatives Financial derivatives are shown at fair value on initial

recognition and then at the current fair value prevailing on

each subsequent balance sheet date. Any resultant gains

or losses are charged to comprehensive income. EBN

does not apply hedge accounting.

International Financial Reporting Standards (IFRS) The 2011 financial statements take into account the

consequences of the following standards, the application

of which has been in force since the start of the 2011

financial year:

— IAS 24 Related Party disclosures

— IAS 32 Financial Instruments:

Presentation – Classification of Rights Issues

— IFRIC 14 Prepayments of a Minimum Funding

Requirement

— Improvements to IFRS

public trANsport hAs Also discovErEd gAs


The 2011 financial statements do not take account of the

consequences of the following standards and interpreta-

tions, the application of which has been in force since the

start of the 2011 financial year. These standards are not

applicable to EBN and, therefore, have no effect:

— IFRIC 19 Extinguishing Financial Liabilities with

Equity Instruments

EBN has opted not to apply the following standards,

amendments to standards and interpretations which have

not yet come into force or which have not yet been ratified

by the European Union:

— IFRS 7 Financial Instruments:

Disclosures - Amendment to Disclosures

— IFRS 9 Financial Instruments

— IFRS 10 Consolidated Financial Statements

— IFRS 11 Joint Arrangements

— IFRS 12 Disclosure of Interests in Other Entities

— IFRS 13 Fair Value Measurement

— IAS 1 Presentation of Financial Statements

— IAS 12 Income Taxes- Recovery of Tax Assets

— IAS 19 Employee Benefits

— IAS 27 Separate Financial Statements

— IAS 28 Investments in Associates and Joint Ventures

— IFRIC 20 Stripping Costs in the Production Phase

of Surface Mine

EBN does not expect application of these new standards,

amendments to standards and new IFRIC interpretations

to result in any material consequences for the company’s

financial statements in future financial years.

“Our shuttle service runs on gas, which causes less particle pollution of the

air in the historic city centre.”

lEidEN city pArKiNg plAN:


coNsolidAtEd stAtEmENt of comprEhENsivE iNcomE

In EUR million

note 2011 changes in relation to 2010 2010

net sales 2 7,103 10% 6,486

levies 3 2,964 2.571

operational costs 4 658 627

depreciation and amortization 5 617 499

operating expenses 4,239 15% 3,697

operating profit 2,864 3% 2,789

financial income 6 139 16

financial expense 6 -232 -91

share of profit from associates 7 53 54

pre-tax profit 2,824 2% 2,768

taxes 8 -693 0% -692

net profit 9 2,131 3% 2,076

other comprehensive income - -

total comprehensive income 2,131 3% 2,076

coNsolidAtEd bAlANcE shEEt

In EUR million

assets note year-end 2011

year-end 2010 liabilities note year-end

2011year-end

2010

non-current assets shareholder’s equity 14

property, plant and equipment 10 4,206 3,564 share capital 128 128

associates 11 113 113 retained earnings 76 46

4,319 3,677 204 174

non-current liabilities

provisions 15 2,033 1,338

deferred tax liabilities 8 120 48

borrowings 16 1,733 1,558

other 17 16 19

3,902 2,963

current assets

inventories 12 68 39 current liabilities

receivables 13 1,085 1,244 borrowings 16 713 504

deferred tax credits 80 - tax 96 112

derivatives 19 327 331 other 18 956 1,567

cash and cash equivalents 9 29 derivatives 19 17 -

1,569 1,643 1,782 2,183

total 5,888 5,320 total 5,888 5,320


summAry of chANgEs iN shArEholdEr’s Equity

in EUR million

The retained profit at year-end 2011 of EUR 76 million represents the proposed final dividend. Total earnings per share for 2011 amounted

to EUR 7,483, which was an increase of 3% in relation to 2010.

For more information, please refer to note 14.

share capital

retained earnings

total equity

balance as at 1 January 2010 128 30 158

net profit - 2,076 2,076

other comprehensive income - - -

net profit after tax - 2,076

final dividend 2009 - -30 -30

interim dividend . -2,030 -2,030

balance as at 31 December 2010 128 46 174

net profit - 2,131 2,131

other comprehensive income - - -

net profit after tax - 2,131 2,131

final dividend 2010 - -46 -46

interim dividend - -2,055 -2,055

balance as at 31 December 2011 128 76 204

coNsolidAtEd stAtEmENt of cAsh flows

In EUR million

2011 2010

operating activities

net profit from continuing activities 2,131 2,076

conversion to net cash provided by operating activities

- income from participations -53 -54

- dividend received 53 54

- depreciation and amortization 617 499

- change in working capital * -265 312

- change in provisions 19 26

- interest - charged to comprehensive income 93 75

- received 45 2

- paid -69 -35

- taxes - charged to comprehensive income 693 692

- paid -717 -818

- transfers 28 50

444 803

net cash from operating activities 2,575 2,879

investing activities

property, plant and equipment -611 -607

net cash used in investing activities -611 -607

financing activities

profit distribution -2,320 -1,984

loans taken up 415 318

loans repaid - -319

change in debts to credit institutions -79 -258

net cash from financing activities -1,984 -2,243

change in cash and cash equivalents -20 29

balance cash and cash equivalents at 1 January 29 -

balance cash and cash equivalents at 31 January 9 29

* change in working capital:

- inventories -29 -27

- receivables 159 -237- current liabilities (excluding loans, debts to credit

institutions and profit distribution)-395 576

-265 312


NotEs to thE coNsolidAtEd fiNANciAl stAtEmENts

(1) General informationAll amounts in these explanatory notes are in millions of

euros unless otherwise stated.

The company profit and loss account

As permitted by section 402, Book 2 of the Dutch civil

code, the company profit and loss account is presented

in a condensed format.

Estimates and assessments

Estimates and assessments have to be made in the pre-

paration of the financial statements. These have conse-

quences for the amounts reported for assets and liabilities,

income and expenditure items and the related reporting of

contingent assets and liabilities on the date of the financial

statements. Results can be influenced by such estimates

and assessments.

In those cases, these explanatory notes set out the prin-

ciples that management considers to be most important

and that are usually the most difficult to estimate due to

intrinsic uncertainties. The provision for decommissioning

and restoration costs and the capitalisation of decom-

missioning and restoration costs in the balance sheet is

largely based on information provided by the operators.

In principle, EBN adheres to the information provided by

operators regarding production data, and determines

proven and probable gas and oil reserves in accordance

with the definitions laid down by SPE, WPC, AAPG and

SPEE in the Petroleum Resources Management System

(PMRS). More information on the way in which this provi-

sion is calculated can be found in “Basis for the valuation

of assets and liabilities and determination of profit”, section

“Provisions” on page 43.

The most important estimates are those required to

determine realisable values in the case of depreciation

(see statement of cash flows and note 10), classification

of pensions and corporation tax (deferred tax).

The Executive Board emphasises that future events may

differ from projections and that estimates have to be

adjusted regularly.

NotEs to thE stAtEmENt of comprEhENsivE iNcomE

(2) Net salesEBN performs one main activity: exploration for and

production of natural gas and oil. All sales are realised in

the Netherlands. The assets in which EBN participates are

also located in the Netherlands. Information on the main

debtors can be found in note 23.

Net sales in 2011 from ordinary activities amounted to

EUR 7,103 million, representing an increase of EUR 617

million, or 10%, in relation to 2010.

The increase in sales was mainly due to higher sales

prices (22%) even though gas sales were lower (-9%).

Sales volumes for oil and gas condensate were lower than

in 2010, but were compensated for by higher oil prices.

(3 and 4) Levies and operational costs

in EUR million 2011 2010

levies 2,964 2,571

operational costs 658 627

Levies were EUR 393 million (15%) higher than in 2010.

Levies merely relate to the payments to the Dutch State

related to the production from the Groningen field in 2011,

i.e. the MOR payments, amounting to EUR 2,883 mil-

lion and the State’s share of EUR 76 million. The increase

in the payments to the State in 2011 was mainly due to

higher average gas prices.

Operational costs relate mainly to production and trans-

portation costs.

At year-end 2011 there was still one employee secon-

ded by DSM to EBN. One other person was seconded

from GasTerra to EBN. Total salary costs are included in

the operational costs and amounted in 2011 to EUR 8.6

million (2010: EUR 8.2 million), of which EUR 6.6 million

(2010: EUR 6.4 million) comprised gross salaries, EUR 0.3

million social security costs (2010: EUR 0.4 million),

EUR 1.1 million pension costs (2010: EUR 1.2 million) and

EUR 0.5 million other costs (2010: EUR 0.2 million).

As at the balance sheet date, the company did not have

any contractual obligations – other than the possibility of

higher contributions in future – to pay additional amounts

in the event of the pension fund being in deficit.

(5) Depreciation and amortization


depreciation of property, plant and equipment 565 451

depreciation of property, plant and equipment by reason of decommis-sioning and restoration

52 48

total 617 499

The higher depreciation and amortisation costs were

primarily caused by depreciation and amortization on

proven and producing reserves only, in line with legislation.

For further information please refer to note 10.


(6) Financial income and expense


interest income 7 1

interest income on financial instruments at fair value via the result 40 35

income on financial instruments at fair value via the result 90 12

other financial income 2 1

total financial income 139 49

interest expenses -40 -45

interest expenses on financial instruments at fair value via the result -50 -45

expenses on financial instruments at fair value via the result -46 -

interest expense on discounted provisions -25 -24

other financial income and expenses -71 -10

total financial expenses -232 -124

net financing costs -93 -75

Due to the higher amount of cash available in the year

under review interest income was higher than in 2010.

Interest expenses relate to expenses for short-term and

long-tem loans.

Income and expenses on financial instruments merely

relate to the currency fluctuations for non-current loan-

related derivatives.

(7) Result for associates


GasTerra B.V. 14 14

NOGAT B.V. 32 33

NGT-Extensie 7 7

total 53 54

(8) Tax


current tax expenses current year 622 684

deferred tax expenses arising from temporary differences 71 8

total 693 692

At 25.0%, the effective tax burden for 2011 was virtually

the same as 2010 (25.5%).

In 2011 the nominal corporation tax rate in the Nether-

lands amounted to 25.0% (2010: 25.5%).

Net deferred tax assets and liabilities increased by EUR 72

million as a result of the following changes:


balance at 1 January

deferred tax assets 19 25

deferred tax liabilities -67 -65

total -48 -40

movements as a result of:

- differences between commercial and fiscal valuation of property, plant and equipment

-155 -2

- differences between commercial and fiscal valuation of provisions 83 -6

balance at 31 December -120 -48

of which:

- deferred tax assets 102 19

- deferred tax liabilities -222 -67

movement in assets 83 -6

movement in liabilities -155 -2

Deferred tax assets and liabilities include future tax assets

and liabilities arising from temporary differences between

the amounts calculated in accordance with the commer-

cial principles and those calculated in accordance with

fiscal standards.

(9) Net profitThe net profit for 2011 from continuing operations was

EUR 2,131 million, EUR 55 million (3%) higher than in

2010.


NotEs to thE coNsolidAtEd bAlANcE shEEt

(10) Property, plant and equipmentThe composition of and developments in this item are shown below:

At EUR 611 million, capital expenditure in 2011 was 1%

higher than in 2010 (EUR 607 million). That expenditure

was split between onshore at EUR 228 million (2010: EUR

224 million) and offshore at EUR 383 million (2010: EUR

383 million).

The increase in the capitalisation of the estimated decom-

missioning and restoration costs of installations in 2011

was EUR 675 million (2010: positive EUR 57 million).

Please refer to note 15 for further information.

As a result of the application of IAS 23 “Borrowing Costs”

the capitalised costs for the Bergermeer gas storage faci-

lity project increased by 3.7%, which resulted in borrowing

costs being capitalised to the amount of EUR 1.4 million.

(11) AssociatesEBN defines as associates its 40% participation in GasTer-

ra BV, its 45% participation in NOGAT BV and a number

of smaller participations, including the 12% participation

in the NGT Extension. The latter participation is included

under ‘other’. Associates are shown on the basis of the

equity method. The profits are distributed annually, and so

there is no change in the amounts for which the participa-

tions are shown in the balance sheet.

in EUR million GasTerra NOGAT other2011total GasTerra NOGAT other

2010total

balance at 1 January 86 13 14 113 86 13 14 113

share in profit 14 32 6 52 14 33 7 54

dividend received -14 -32 -6 -52 -14 -33 -7 -54

balance at 31 December 86 13 14 113 86 13 14 113

The following table shows summarised financial information on the GasTerra BV, NOGAT BV and

NGT Extension associates on a 100%-basis.

in EUR million GasTerra NOGATNGT-

Extensie2011total GasTerra NOGAT

NGT-Extensie

2010total

balance sheet total assets current 4,017 84 - 4,101 4,553 79 - 4,632

non-current 33 44 14 91 29 50 11 90

liabilities current 3,834 7 1 3,842 4,366 10 8 4,384

non-current - - - - - - - -

net sales 21,095 106 78 21,279 18,357 114 77 18,548

net profit 36 71 74 181 36 68 60 164

in EUR million totalproduction, trans-port and storage facilities

drilling reimbursements

capitalisation of decommissio-ning and storage costs

capital expendi-ture & wells under construction

balance at 1 January 2010

cost 10,713 5,730 2,495 1,428 574 486

depreciation and amortization 7,265 4,152 1,636 1,157 320 -0

carrying amount 3,448 1,578 859 271 254 486

changes in 2010

cost:

- capital expenditure 607 139 48 - - 420

- commissioning - 80 82 - - -162

- capitalisation of borrowing costs 1 - - - - 1

- capitalisation of decommissioning and storage costs 57 - - - 57 -

- decommissioning -1 -1 - - - -

- writing off dry wells -50 - - - - -50

depreciation and amortization:

- depreciation and amortization -499 -250 -181 -20 -48 -

- decommissioning 1 1 - - - -

116 -31 -51 -20 9 209

balance at 31 December 2010

cost 11,327 5,948 2,625 1,428 631 695

depreciation and amortization 7,763 4,401 1,817 1,177 368 -

carrying amount 3,564 1,547 808 251 263 695

changes in 2011

cost:

- capital expenditure 463 239 49 6 - 169

- capital expenditure on exploration drilling 148 - 131 - - 17

- commissioning - 329 245 - - -574

- capitalisation of borrowing costs 1 - - - - 1

- capitalisation of decommissioning and storage costs 675 - - - 675 -

- decommissioning -20 -20 - - - -

- writing off dry wells -28 - - - - -28

depreciation and amortization:

- depreciation and amortization -617 -298 -242 -26 -51 -

- decommissioning 20 20 - - - -

642 270 183 -20 624 -415

balance at 31 December 2011

cost 12,566 6,496 2,919 1,434 1,306 280

depreciation and amortization 8,360 4,679 2,059 1,203 419 -

carrying amount 4,206 1,817 860 231 887 280


(12) Inventories


materials 5 6

gas 61 33

condensate and oil 2 -

total 68 39

The gas inventory has risen due to further gas injection in

the Bergermeer gas storage facility.

(13) ReceivablesThese can be specified as follows:


accounts receivable from associates 873 934

other trade accounts receivable 39 29

total trade accounts receivable 912 963

other receivables and deferred items 173 281

total 1,085 1,244

Receivables fell by EUR 159 million (13%), mainly as a

result of lower sales volumes in the fourth quarter of 2011

in relation to the fourth quarter of 2010.

Associates relates to GasTerra B.V., in which EBN has a

40% participation.

For information on credit risks please refer to note 19.

(14) Shareholder’s equity


balance at 1 January 174 158

total profit 2,131 2,076

final dividend previous year -46 -30

interim dividend -2,055 -2,030

balance at 31 December 204 174

Each month EBN pays the (provisional) profit to the sha-

reholder, the Ministry of Economic Affairs, Agriculture and

Innovation. These periodic payments largely determine

EBN’s balance sheet structure and result in the compara-

tively low amount of the company’s shareholders’ equity.

On the other hand, the company has very substantial cash

flow throughout the year. EBN’s financing policy is based

on maintaining free access to the main capital markets.

To this end, EBN has ratings from Moody’s and Standard

& Poor’s, and these have been stable for many years at

triple A.

The issued and paid-in share capital amounted to EUR

128 million at the 2011 year-end

(2010: EUR 128 million), consisting of 284,750 shares

(2010: 284,750 shares) each with a nominal value of

EUR 450.00. The declared dividend per share amounted

to EUR 7,378 (2010: EUR 7,234).

The proposed final dividend of EUR 76 million (2010:

EUR 46 million) will be distributed after the General

Meeting of Shareholders has adopted the financial state-

ments. This amount is the balance of the net profit of

EUR 2,131 million minus the already paid-out interim

dividend at EUR 2,055 million. The proposed final dividend

has not been deducted from shareholder’s equity.

(15) ProvisionsProvisions for decommissioning and restoration costs

cover commitments with terms of 1 to 50 years.

Provisions for ground subsidence also cover commitments

with terms of 1 to 50 years.

The provision for decommissioning and restoration costs is

mainly based on operators’ information and is determined

by estimating costs on the basis of current prices, with no

account taken of inflation, and applying a discount rate of

0.3% (2010: 2.0%). The discounted provision is matched

by an amount, included in property, plant and equipment,

and is depreciated on the basis of the Unit-of-Production

(UoP) method.

Total provisions increased by EUR 695 million, which is the

balance of the changes shown below:

in EUR million decommissioning and restoration costs subsidence total

balance at 1 January 2010 1,195 60 1,255

additions - 3 3

withdrawals -4 -1 -5

revision 61 - 61

interest 24 - 24

balance at 31 December 2010 1,276 62 1,338

additions - 5 5

withdrawals -9 -1 -10

revision 675 - 675

interest 25 - 25

balance at 31 December 2011 1,967 66 2,033

The upward adjustment to the provision for decommis-

sioning and restoration costs of EUR 695 million is mainly

due to an updating of the estimated costs of dismantling

and removing installations, as a result of an increase in the

estimated costs and new views on the dates on which

production will end. A discount rate of 0.3% was used for

determining the present values (2010: 2.0%).


(16) Current and non-current borrowings


total of which short-term total of which

short-term

debenture loans 1,871 288 1,420 -

private loans 150 - 138 -

commercial paper 425 425 504 504

total 2,446 713 2,062 504

Non-current borrowings

Non-current borrowings in the balance sheet comprise the following:


JPY 5.000 million 1,59 % private loan 2004/2014 50 46

CHF 350 million 1,75 % public loan 2005/2012 288 280




JPY 10.000 million 1,775 % private loan 2007/2017 100 92



CHF 350 million 0,75 % public loan 2011/2016 288 -

CHF 150 million 1,625 % public loan 2011/2023 123 -

total 2,021 1,558

Borrowings in foreign currencies and associated interest

charges have been fully converted into euros by means of

cross-currency interest rate swaps. This neutralises any

currency-fluctuation effects, as shown in the table. The

average interest rate on all long-terms borrowings in 2011,

including the effects of the cross-currency interest rate

swaps, was 3.4% (2010: 3.7%). All long-term borrowings

have fixed interest rates. All cross-currency swap borro-

wings also have fixed interest rates, with the exception of

the cross-currency interest-rate swap associated with the

JPY 2004/2014 loan.

The following table lists the outstanding debenture loans

and private loans in order of their term to maturity.


within 1 year 288 -

within 1 to 2 year 370 280

within 2 to 3 year 482 360

within 3 to 4 year - 466

within 4 to 5 year 288 -

after 5 year 593 452

total 2,021 1,558

More than 50% of the outstanding non-current borrowings

have remaining terms to maturity of more than three years.

Of the borrowings with remaining terms to maturity of

more than 5 years, a total of EUR 100 million will mature

in 2017, EUR 370 million in 2020 and EUR 123 million in

2023.

(17) Other non-current liabilitiesThis item relates mainly to a debt of EUR 17 million (2010:

EUR 17 million) to the Dutch State resulting from the

GasTerra B.V. stock dividend. The Dutch State is entitled

to part of EBN’s entitlement to the GasTerra B.V. dividend

in the event of GasTerra B.V. being liquidated.

(18) Other current liabilities This item can be specified as follows:


trade accounts payable 251 170

interest payments 32 35

levies 525 950

other liabilities 148 412

total 956 1,567

The decrease in levies is mainly due to the lower MOR

obligation.

No debenture loans or private loans were redeemed in

2011. Total borrowings increased by EUR 384 million

(+19%). That increase is primarily the result of the issue of

two new debenture loans with a total nominal value of CHF

500 million, which mature in 2016 and 2023.

In 2012, a debenture loan with a nominal value of CHF

350 million will be repaid. This was shown in 2011 as a

short-term loan. No security has been provided for the

outstanding borrowings with a total remaining debt at 2011

year-end of EUR 2,446 million. In 2012, a debenture loan

with a nominal value of CHF 350 million will be repaid. This

was shown in 2011 as a short-term loan. No security has

been provided for the outstanding borrowings with a total

remaining debt at 2011 year-end of EUR 2,446 million. The

loan agreements contain provisions limiting the provision of

security.


(19) Risk management

General

The main financial risks for EBN are the liquidity risk, the

credit risk and the market risk (consisting of interest rate

risk and currency risk). EBN’s financial policy focuses on

limiting the effects of currency and interest-rate fluctuati-

ons on its profit. EBN uses financial derivatives to manage

interest and currency risks, specifically those relating to

the funding of its operations. The company does not take

any speculative positions with financial derivatives.

Capital management

EBN aims for continuous good access to the money and

capital markets by means of, for example, prudent finan-

cing policy aimed at maintaining the short and long-term

credit ratings at the highest levels. Capital expenditure de-

cisions are evaluated on the basis of the expected return,

considering for EBN’s weighted average cost of capital.

Liquidity risk

EBN has a commercial paper programme of EUR 2,000

million. This is the same as in 2010. At the 2011 year-end,

EUR 1,575 million of this program was not used.

The following table shows the expected annual cash

flows, along with the interest payable on the borrowings

and the costs of redeeming the associated derivatives:

in EUR million 2011 2011 2010

borrowings interest payment at redemption

cash flow from deriva-

tives

total cash out

total cash out

within 1 year 713 -58 -713 35 -736 -545

within 1 to 2 years 370 -48 -370 58 -360 -272

within 2 to 3 years 482 -36 -482 131 -387 -325

within 3 to 4 years - -22 - - -22 -376

within 4 to 5 years 288 -22 288- 4- -313 -11

after 5 years 593 -72 -593 92 -574 -430

total 2,446 -258 -2,446 312 -2,392 -1,959

policy to coNtrol fiNANciAl risKs

Credit risk

The credit risk to which EBN is exposed consists mainly

of the amount it has on deposit at credit institutions,

investments in money market funds and the market value

of outstanding financial derivatives. EBN limits the credit

risk by only doing business with financial institutions with

high creditworthiness and by setting specific credit limits

for each financial institution, based on the institution in

question’s credit rating. For lending money, the minimum

is a P-1 Moody’s or A-1 Standard & Poor’s short-term

rating and an A2 Moody’s or A Standard & Poor’s long-

term rating. A minimum AAA credit rating applies to

money market funds.

If derivative transactions are carried out in the context of

long-tem financing this is only done with a counterparty

with a minimum of A2 Moody’s or A Standard & Poor’s

long-term rating. EBN did not suffer any credit losses in

2011.

Credit risk on receivables

In 2011 EBN made 91% (2010: 90%) of its sales to Gas-

Terra B.V. (long term rating S&P AA+), for which the credit

risk is estimated as low. Amounts owed by GasTerra B.V.

account for 96% (2010: 97%) of total receivables.

Interest rate risk

The objective of EBN’s interest rate risk policy is to limit

interest rate risks arising from the company’s funding and

thus to achieve minimal interest charges. A maximum of

60% of the long-term borrowings and financial derivatives

shall have a variable interest rate in accordance with internal

guidelines. With the exception of one cross-currency

interest-rate swap, all long-term borrowings are at fixed

rates of interest.

The following analysis of the sensitivity of borrowings and

the related financial derivatives to interest rate movements

is based on a direct change of 1 percentage point in the

interest rates for all currencies and maturities as at 31

December 2011. All other variables remain unchanged.

A reduction of 1% in interest rates would result in an

estimated decrease of EUR 20 million in net financing

costs, based on the portfolio of financial instruments at

31 December 2011. An increase of 1% in interest rates

would result in an estimated increase of EUR 17 million in

net financing costs. The main reason for these effects is

that a change in the fair value of derivatives as a result of

a change in interest rate is charged directly to profit.


2011 carrying amount fair value change in fair

value +1%change in fair

value -1%

in EUR million

cash and cash equivalents 9 9 - -

receivables 1,085 1,085 - -

current borrowings -713 -716 2 -2

other current liabilities -956 -956 - -

non-current borrowings -1,733 -1,820 83 -89

cross currency swaps positive used for non-current borrowings 314 314 -17 19

cross currency swaps negative used for non-current borrowings -17 -17 - 1

forward exchange contracts used for current borrowings 13 13 - -

total -1,998 -2,088 68 -71

2010 carrying amount fair value change in fair

value +1%change in fair

value -1%

in EUR million



current borrowings -504 -504 -1 1

other current liabilities -1,567 -1,567 - -

non-current borrowings -1,558 -1,624 68 -73

cross currency swaps positive used for non-current borrowings 327 327 -19 21

forward exchange contracts used for current borrowings 4 4 - -

total -2,025 -2,091 48 -51

2011 carrying amount fair value change in

value +10%change in

value -10%

in EUR million




other current liabilities -956 -956 - -

non-current borrowings -1,733 -1,820 -205 168

cross currency swaps positive used for non-current borrowings 314 314 190 -155

cross currency swaps negative used for non-current borrowings -17 -17 47 -39

forward exchange contracts used for current borrowings 13 13 48 -39

total -1,998 -2,085 - -

2010 carrying amount fair value change in

value +10%change in

value -10%

in EUR million




other current liabilities -1,567 -1,567 - -

non-current borrowings -1,558 -1,624 -182 149

cross currency swaps used for non-current borrowings 327 327 182 -149

forward exchange contracts used for current borrowings 4 4 42 -34

total -2,025 -2,091 - -

The following table shows the sensitivity of the fair value of

the financial instruments to changes in interest rate as at

31 December 2011:

At year-end 2010, sensitivity of financial liabilities to

interest rate changes with regard to the fair value of the

financial instruments ranged between a negative amount

of EUR 19 million (+1% change in interest rates) and a

positive amount of EUR 21 million (-1% change in interest

rates).

Currency risk

EBN fully hedges currency risks arising from sales, purcha-

ses and borrowings at the time that the trade receivables or

trade liabilities arise. At year-end 2011 there were no trade

receivables hedged through forward exchange contracts

(year-end 2010 USD 10 million). Currency risks on short-

term borrowings in foreign currencies are hedged with for-

ward exchange contracts. At year-end 2011 a total of USD

550 million in trade receivables related to commercial paper

issued in USD was hedged through forward exchange con-

tracts (at year-end 2010 there were no outstanding trade

receivables in foreign currencies to be hedged).

Currency risks on long-term borrowings in foreign currency

are hedged with cross currency interest rate swaps (see

note 16). The following analysis of the sensitivity of the

net debt (including financial derivatives) to fluctuations in

exchange rates against the euro is based on a 10% move-

ment in all exchange rates in relation to the euro com-

pared to their levels at 31 December 2011, with all other

variables remaining unchanged. A change of +10% means

the euro weakens against the foreign currencies, while a

change of -10% means the euro strengthens against the

foreign currencies.


in EUR million31 december 2011 31 december 2010

carrying amount fair value carrying amount fair value

assets

associates 113 113 113 113

current receivables 1,165 1,165 1,244 1,244

financial derivatives 327 327 331 331

cash and cash equivalents 9 9 29 29

liabilities

non-current borrowings 1,733 1,820 1,558 1,624

current borrowings 713 716 504 504

financial derivatives 17 17 - -

other current liabilities 1,052 1,052 1,679 1,679

in EUR million assets liabilities total

cross currency interest rate swaps 327 - 327

forward currency contracts 4 - 4

total financial derivatives in relation to borrowings 331 - 331

balance as at 31 December 2010 331 - 331

cross currency interest rate swaps 314 -17 297

forward currency contracts 13 - 13

total financial derivatives in relation to borrowings 327 -17 310

balance as at 31 December 2011 327 -17 310

(20) Rights and obligations not shown in the balance sheet

As indicated in the accounting principles with respect to

the valuation of assets and liabilities and the determination

of the profit, EBN participates in numerous joint ventures.

The basis for this is laid down in agreements of coopera-

tion, from which multi-year financial rights and obligations

arise for the future. As an indication, the remaining obliga-

tions at the 2011 year-end for 4 major investment projects

(Bergermeer gas storage facility, Q13 Amstel, K4aZ and

L5aD) amounted to EUR 429 million on the balance sheet

date (2010: EUR 459 million). In addition, EBN’s direct and

indirect share in the gas reserves of fields in which EBN

participates amounted, as at 31 December 2011, to 431

billion m3 GE (2010: 462 billion m3 GE).

(21) Net debt


borrowings:

non-current borrowings 1,733 1,558

current borrowings 713 504

total borrowings 2,446 2,062

cash and cash equivalents -9 -29

financial derivatives, assets -310 -331

net debt (A) 2,127 1,702

shareholder’s equity (B) 204 174

gearing ratio A/(A+B)* 100% 91% 91%

(22) Notes on the statement of cash flows

The statement of cash flows was prepared on the basis of

the indirect method with a comparison made between the

opening and closing balances. Movements not resulting in

an inflow or outflow of cash were subsequently eliminated.

Information on movements in the statement of cash flows

can largely be derived from the statements of movements

in the relevant balance sheet items.

(23) Related partiesGasTerra B.V. and EBN are related perties. EBN has a to-

tal of 79 (2010: 67) contracts with GasTerra B.V. Of the net

sales of EUR 7,103 million (2010: EUR 6,486 million), EUR

6,488 million (EUR 5,831 million) was generated through

GasTerra B.V.

The receivables in 2011 include an amount of EUR 873

million (2010: EUR 934 million) for supplies to GasTerra B.V.

The Dutch State, being the shareholder, can be regarded

as an associated party. All levies, corporation taxes and

net profits are paid to the State. More information can be

found in notes 14 and 18 in these Financial Statements.

othEr NotEs

Fair value of financial instruments

The table below summarises the carrying amounts and

estimated fair values of financial instruments:

Fair values of listed non-current borrowings are based on

published rate (level 1 according to IFRS), while the other

fair values are calculated on the basis of the market infor-

mation available (level 2 according to IFRS). All financial

assets and liabilities at fair values with changes in value

recognised in comprehensive income of profit are clas-

sified at level 2.

Current receivables, cash and cash equivalents and short-

term debts are shown at their carrying amounts.

In view of the short term to maturity of these instruments,

these amounts approximate their fair values. The following

table summarises the carrying amounts of financial deriva-

tives, specified according to type and objective:


(24) Key managementFor notes to the remuneration of boardmembers we refer

to the notes to the company financial statements.

(25) Events after the balance sheet dateThere were no events after the balance sheet date requi-

ring further disclosure.

Utrecht, 21 March 2012

Executive Board Supervisory Board

J.D. Bokhoven R.M.J. van der Meer

A.H.P. Gratama van Andel

G-J. Kramer

H.M.C.M. van Oorschot


compANy profit ANd loss AccouNt compANy bAlANcE shEEt

in EUR million

assets note year-end 2011

year-end 2010 liabilities note year-end

2011year-end

2010

non-current assets shareholder’s equity 14

property, plant and equipment 10 4,196 3,552 share capital 128 128

associates 11 113 113 retained earnings 76 46

4,309 3,665 204 174

non-current liabilities

provisions 15 2,033 1,338

deferred tax liabilities 8 120 48

borrowings 16 1,733 1,558

other 17 16 19

3,902 2,963

current assets

inventories 12 68 39 current liabilities

receivables 13 1,085 1,244 borrowings 16 713 504

deferred tax credits 80 - tax 96 112

derivatives 19 327 331 other 18 956 1,567

cash and cash equivalents 19 41 derivatives 19 17 -

1,579 1,655 1,782 2,183

total 5,888 5,320 total 5,888 5,320


income from participations 60 62

other income after tax 2,071 2,014

net profit 2,131 2,076

other comprehensive income - -

total comprehensive income 2,131 2,076


NotEs to thE compANy fiNANciAl stAtEmENts

profit AppropriAtioN

General

EBN’s company financial statements are prepared in

accordance with the principles for financial reporting gene-

rally accepted in the Netherlands and the legal stipulations

regarding the financial statements as defined in Part 9,

Book 2 of the Dutch Civil Code.

To the determination of the accounting principles applied

for valuing assets and liabilities and the determination of

the results of the company financial statements, use has

been made of the option presented in article 2:362, para-

graph 8 of the Dutch Civil Code. The principles for the

valuation of assets and liabilities and determining the result

of the company financial statements are therefore the

same as those used in the consolidated financial state-

ments. Participations where any significant influence is

exerted on the commercial and financial policy are valued

on the basis of the net asset value.

The consolidated financial statements have been prepared

in accordance with the International Financial Reporting

Standards (IFRS) as accepted within the European Union

(EU-IFRS) and with section 9, Book 2 of the Dutch Civil

Code. For a description of the principles applies, please

refer to page 40.

Company profit and loss account

The company profit and loss account has been formulated

in accordance with the limitations permitted pursuant to

article 2:402 of the Dutch Civil Code.

Other notes

The single balance sheet includes the valuation of the

100% participations, which are consolidated in the conso-

lidated financial statements.

In view of the minimal differences between the other ba-

lance sheet items shown in the consolidated and company

financial statements, for further information on these items,

please refer to the notes of explanation to the consolida-

ted financial statements, which can be found on page 52.

Fees paid to external auditorsFees paid to Ernst & Young, which are included in the

operational costs, amounted in 2011 to:

EUR 629,000 for audit services (company and joint ven-

ture audits) (2010: EUR 443,000), EUR 0 for tax advice

(2010: EUR 0) and EUR 187,000 for other services (2010:

EUR 144,000).

Directors’ remunerationIn 2011, the total remuneration paid to (former) members

of the Executive Board amounted to EUR 0.9 million

(2010: EUR 0.8 million).

In 2011 remuneration paid to the Supervisory Board mem-

bers amounted to EUR 0.1 million (2010: EUR 0.1 million).

Utrecht, 21 March 2012

Executive Board Supervisory Board

J.D. Bokhoven R.M.J. van der Meer

A.H.P. Gratama van Andel

G-J. Kramer

H.M.C.M. van Oorschot

Profit appropriation

Profit appropriation takes place in accordance with what is

defined in article 21 of the company’s articles of association.

To the shareholder.

— part of the profit will be distributed annually as a

special profit distribution;

— the remainder of the profit will be distributed as a

dividend.

Events after the balance sheet date

For more information, please refer to note 25 of these

Financial Statements.


Opinion with respect to the consolidated

financial statements

In our opinion, the consolidated financial statements give

a true and fair view of the financial position of EBN B.V. as

at 31 December 2011 its result and its cash flows for the

year then ended in accordance with International Financial

Reporting Standards as adopted by the European Union

and with Part 9 of Book 2 of the Dutch Civil Code.

Opinion with respect to the company

financial statements

In our opinion, the company financial statements give a

true and fair view of the financial position of EBN B.V. as

at 31 December 2011 and of its result for the year then

ended in accordance with Part 9 of Book 2 of the Dutch

Civil Code.

Report on other legal and regulatory

requirements

Pursuant to the legal requirement under Section 2:393 sub

5 at e and f of the Dutch Civil Code, we have no deficien-

cies to report as a result of our examination whether the

report of the Executive Board, to the extent we can as-

sess, has been prepared in accordance with Part 9 of

Book 2 of this Code, and whether the information as

required under Section 2:392 sub 1 at b-h has been an-

nexed. Further we report that the report of the Executive

Board, to the extent we can assess, is consistent with the

financial statements as required by Section 2:391 sub 4 of

the Dutch Civil Code.

Amsterdam, 21 March 2012

Ernst & Young Accountants LLP

Signed by J.J. Vernooij

To: the General Meeting of Shareholders

of EBN B.V.

Report on the financial statementsWe have audited the accompanying financial statements

2011 of EBN B.V., Utrecht. The financial statements inclu-

de the consolidated financial statements and the company

financial statements. The consolidated financial statements

comprise the consolidated balance sheet as at 31 Decem-

ber 2011, the consolidated statement of comprehensive

income, summary of changes in shareholder’s equity and

statement of cash flows for the year then ended, and

notes, comprising a summary of the significant accounting

policies and other explanatory information. The company

financial statements comprise the company balance sheet

as at 31 December 2011 the company income statement

for the year then ended and the notes, comprising a sum-

mary of the accounting policies and other explanatory

information.

Executive Board’s responsibility

The Executive Board is responsible for the preparation and

fair presentation of these financial statements in accor-

dance with International Financial Reporting Standards as

adopted by the European Union and with Part 9 of Book

2 of the Dutch Civil Code, and for the preparation of the

report of the Executive Board in accordance with Part 9 of

Book 2 of the Dutch Civil Code. Furthermore the Executive

Board is responsible for such internal control as it determi-

nes is necessary to enable the preparation of the financial

statements that are free from material misstatement,

whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these finan-

cial statements based on our audit. We conducted our

audit in accordance with Dutch law, including the Dutch

Standards on Auditing. This requires that we comply with

ethical requirements and plan and perform the audit to

obtain reasonable assurance about whether the financial

statements are free from material misstatement.

An audit involves performing procedures to obtain audit

evidence about the amounts and disclosures in the

financial statements. The procedures selected depend on

the auditor’s judgment, including the assessment of the

risks of material misstatement of the financial statements,

whether due to fraud or error.

In making those risk assessments, the auditor considers

internal control relevant to the entity’s preparation and fair

presentation of the financial statements in order to design

audit procedures that are appropriate in the circumstan-

ces, but not for the purpose of expressing an opinion on

the effectiveness of the entity’s internal control. An audit

also includes evaluating the appropriateness of accounting

policies used and the reasonableness of accounting esti-

mates made by the Executive Board, as well as evaluating

the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our audit

opinion.

iNdEpENdENt Auditor’s rEport


KEy figurEs

in EUR million IFRS IFRS IFRS IFRS IFRS IFRS IFRS

2011 2010 2009 2008 2007 2006 2005 2005 2004 2003 2002

number of EBN participations in joint ventures:

- production licences onshore 24 23 22 21 20 14 14 14 14 14 14

- production licences offshore 101 103 103 100 95 85 85 85 77 77 70

- exploration licences 47 48 45 41 26 17 19 19 22 26 31

sales (billion m³, 100%) 72 80 70 73 64 66 67 67 72 63 64

change in % compared to previous year (100%) -10 14 -5 +11 -3 -1 -7 -7 +15 -4 -4

- sales Groningen (billion m³, EBN share) 18 20 15 16 12 13 13 13 13 11 10

- sales small fields (billion m³, EBN share) 12 13 14 15 15 15 15 15 18 15 17

total sales (billion m³, EBN share) 30 33 29 30 27 28 28 28 30 26 27

average selling price of gas

(€-cents per m³, 35.17 MJ/m³) 22.63 18.58 20.72 26.91 20.67 21.52 16.46 16.46 13.17 13.88 12.55

sales from:

- continuing operations 7,103 6,486 6,387 8,698 6,090 6,264 4,883 4,883 4,230 3,872 3,633

- discontinued operations 3,384 3,384

total sales 7,103 6,486 6,387 8,698 6,090 6,264 8,267 8,267 4,230 3,872 3,633

change from continuing operations in % compared to previous year 10 2 -27 +43 -3 +28 +15 +15 +9 +7 -12

net profit from:

- continuing operations 2,131 2,076 2,211 3,269 2,367 2,378 1,673 1,637 1,534 1,380 1,296

- discontinued operations 2,154 2,154

total net profit 2,131 2,076 2,211 3,269 2,367 2,378 3,827 3,791 1,534 1,380 1,296

net profit from continuing operations in % of the sales 30 32 35 38 39 38 34 34 36 36 36

property, plant and equipment:

- capital expenditure onshore 228 224 238 129 277 146 121 121 143 138 125

- capital expenditure offshore 383 383 475 447 405 478 446 446 207 316 325

- decommissioning and restoration 675 57 -163 93 137 273 149

total capital expenditure 1,286 664 550 669 819 896 716 567 350 454 450

depreciation and amortization 617 499 462 501 494 403 374 376 337 344 334

shareholders’ equity 204 174 158 160 162 290 237 437 348 329 280

gearing ratio (%) 91 91 93 91 93 86

outside capital 5,684 5,146 4,520 5,386 4,664 3,902 3,437 2,977 2,730 2,592 2,746


Bcm Billion cubic metres.

BOE Barrel of oil equivalent

CCS Carbon capture and storage.

Cluster Location from which multiple wells can be drilled.

Corporate Governance Code (old) Code of Conduct for Companies listed on the stock exchange.

Corporate Governance Code (new) The Dutch Corporate Governance Code of the Corporate Governance Code

Monitoring Committee.

COSO The Committee of Sponsoring Organizations of the Treadway Commission.

CSR Corporate Social Responsibility

Cushion gas Gas that has to be present in a field or storage facility to maintain the pressure.

Dashboard Review of company-specific performance indicators.

Energy mix Proportion of energy used in the Netherlands from different sources of energy.

End-of-field-life Gas or oil field in the final phase of production.

E&P Exploration and production.

EL&I (new) Ministry of Economic Affairs, Agriculture and Innovation.

EZ (old) Ministry of Economic Affairs.

Fallow Acreage Convenant Covenant, signed on 31 August 2010, for stimulating the exploration for and

production of oil and gas reserves and the storage of minerals in the Dutch part

of the continental shelf, as agreed between the Minister of Economic Affairs,

Agriculture and Innovation and mining companies with operations on the conti-

nental shelf.

Fracking Technique by which fluid is injected under high pressure into stone containing

gas, ‘breaking’ the stone so the gas can be extracted.

Fuel mix Percentage of each fuel source in the total fuels used to generate energy.

Gasgebouw Public-private cooperation in the Groningen Partnership and GasTerra.

Gas Hub European gas-market centre.

Gas Hub Discussion Platform Discussion forum of the Dutch government, the gas industry and knowledge

infrastructure organisations to discuss new initiatives and strategic issues con-

cerning the physical national and international gas-hub infrastructure

Gas deposit Subsurface accumulation of producible gas.

GE Groningen equivalent (m3 gas with a combustion value of 35.17 MJ at 0 degrees

Celsius and 101.325 kPa).

Geothermal energy Thermal energy generated and stored in the Earth.

HR Human Resources.

ICT Information and Communication Technologies.

IFRIC International Financial Reporting Interpretations Committee.

IFRS International Financial Reporting Standards.

IMS Integral Management System.

LNG Liquefied natural gas.

Mining Act Dutch Act containing regulations governing the exploration for and production

and storage of minerals.

NAM Nederlandse Aardolie Maatschappij (Dutch oil company in which Royal Dutch

Shell and Exxon Mobil have equal shares).

Near-field exploration Exploration for gas close to existing production locations.

NOGEPA Netherlands Oil and Gas Exploration and Production Association.

Offshore At sea.

Operator Party in the production process that carries out production activities on behalf of

the partners.

Permeability The degree to which a solid substance can be pervaded by other substances.

PRMS Petroleum Resources Management System: international classification system

describing the status and volumes of oil and gas resources.

ROAD Rotterdam Storage and Capture Demonstration Project.

Scorecard Review of department-specific performance indicators.

Shale gas Gas held in tight reservoirs in shales that have insufficient permeability for the

gas to flow easily to the well bore.

Shallow gas Gas produced from relatively shallow reservoirs (< 800 m depth, mostly uncon-

solidated).

SodM State Supervision of Mines.

Spot market Public financial market, in which surpluses are traded and shortages made up

for immediate delivery and payment in the very short term.

State participation Shareholder status of the Dutch State.

Stranded reserves or fields Natural gas deposits that are technically or economically impractical to develop

and produce at a particular time.

Tight gas Gas produced from tight reservoirs in sandstones that have insufficient permea-

bility for the gas to flow easily to the well bore.

TNO Netherlands Organisation for Applied Science TNO.

Treasury Management of a company’s cash and cash equivalents.

glossAry

| EBN Annual Report | 201180

Visiting addressEBN B.V.

Moreelsepark 48

3511 EP Utrecht

Postal addressPO Box 19063

NL-3501 DB Utrecht

Telephone: +31 (0)30 2339001

Fax: +31 (0)30 2339051

E-mail: [email protected]

Colophon

Design and layouta-design, Sassenheim

PhotographyAstrid Koppers, Leiden

Joel Frijhoff, Amsterdam

PrintingDeltabach Grafimedia

© 2012 EBN

No part of this publication may be copied and/or made public by means of printing, photography, microfilm or in any other

way whatsoever without EBN’s prior written consent.

coNtAct iNformAtioN

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