Noreco revenues up on increased production levels

Norwegian Energy Company ASA (Noreco)  today reported its first half year revenues were NOK 702 million, compared to NOK 462 million for the same period last year. Significantly higher production is the main contributing factor for the increase in revenues.

Noreco’s share of oil-and gas production was 5 763 boepd in the second quarter 2014 and 6 360 boepd for the first half of 2014. This is an increase of 47 percent compared to the first half of 2013, and 63 percent higher than the second half of 2013.

“Production from our two most important fields, Huntington and Nini, has fluctuated considerably so far this year, but in both cases the outlook for the production is more stable going forward”, informs CEO Svein Arild Killingland.

“The repair of the Siri-platform that receives production from Nini is complete, and regular production is expected to be re-established in September or October this year. The maintenance work that has caused restrictions on Huntington will be completed in August”.

Revenues for the second quarter 2014 were NOK 318 million, corresponding to an increase of 29 percent from the second quarter 2013. EBITDA was negative with NOK 29 million in the second quarter 2014, of which exploration expenses amounted to NOK 173 million. EBITDA so far this year was positive with NOK 137 million, compared to a negative EBITDA of NOK 211 million for the same period last year. In addition to increased production, higher oil prices and favourable foreign exchange rates contribute somewhat.

Exploration

Noreco has completed two wells so far this year. The exploration well on Verdande was completed in the second quarter. Noreco was the operator, and completed the drilling operation in a safe and cost efficient manner. Only smaller volumes of hydrocarbons were encountered.

The first Gohta appraisal well was completed in July. Presence of oil and gas was confirmed as expected and two production tests were undertaken. The test of the gas zone was positive, whereas the results from the oil zone are non-conclusive. Further evaluation of the discovery is underway and a new appraisal well is expected in 2015.

“Our future exploration programme consists of three approved wells. We are about to mature a decision regarding further wells, and our ambition to drill 3-5 attractive wells per year is thereby well within reach for 2015”, says Killingland.

The Xana-well in Denmark is expected to start in the fourth quarter. The wells on the Niobe and Haribo prospects on the UK and Norwegian continental shelf respectively are approved, and a further appraisal well on Gohta is probable in 2015.

“Each of these wells will contribute to clarify the potential in our license portfolio. Positive results could bring along positive adjustments in the company’s resources. There is also potential to increase our recoverable reserves should the ongoing work on maturing the Huntington Fulmar-formation results in a development decision”, says Killingland.