Noreco’s 3Q Net Loss Deepens

Norwegian Energy Company ASA (Noreco) today presents its third quarter 2013 report, with a negative EBITDA of NOK 284 million and a net loss of NOK 569 million for the period.

The results for the quarter were marked by a number of significant one-off write-offs and write-downs related to exploration, discoveries and fields.

A significant event since the previous quarterly presentation is the refinancing of the company, which was approved in November. An issue of new shares of up to NOK 530 million has been decided, and the company’s bond debt has been restructured; as accounted for in previous releases from the company.

Another important event was the successful drilling of the Gohta licence in the Barents Sea, where a significant amount of oil was proven in a reservoir with very good production properties. The preliminary estimate of the size of the discovery is 113-239 million boe. Noreco’s share of this is 20 percent.

The production from Noreco’s fields was unstable through large parts of the third quarter. Average production for the quarter was 3 117 boe per day. The three Danish fields Nini, Nini East and Cecilie remain shut down. The Huntington field on the UK continental shelf is now ramping up production, as previously reported, and is currently producing at around 4 500 boepd net to Noreco.

The average realised oil, gas and NGL price in the third quarter was USD 102 per boe, compared to USD 103.7 per boe in the third  quarter 2012.

Noreco has received a request from its partners in the Danish licenses Nini, Nini east and Cecilie to provide full guarantee for the future abandonment expenditures as from 1 January 2014. Noreco’s share of the abandonment costs are currently estimated to approx. DKK 500 million. The guarantee obligation is funded through the restructuring of the Group’s bonds, but there is not an established consensus on the legal form or amount for

the final guarantee arrangement. The operator has recommended that the Amalie discovery should not be developed and the license should be relinquished. This decision has resulted in expensing NOK 192 million after tax. Write-downs amounted to NOK 272 million after tax for the quarter related to Oselvar and the Siri satellite fields

The Noreco group had revenues of NOK 177 million in the  third quarter 2013, a decrease of 27.2 percent compared to  the third quarter 2012. All of the producing fields in Noreco’s  portfolio suffered operational problems in the quarter.

Net result for the third quarter was a loss of NOK 569 million, compared to a loss of NOK 185 million for the third quarter 2012.

[mappress]
November 28, 2013