North Energy Bolsters its Presence in the Barents Sea and the Norwegian Sea

North Energy will participate in this year’s first exploration well in the spring. The company will participate in at least three exploration wells in the Barents Sea in 2011, and this makes North Energy one of the oil companies with highest exploration activity in this area in the coming year.

In the APA 2010 round North Energy was awarded four out of four licenses applied for in the high north. In addition, the company received one award in the North Sea. As a result, North Energy now participates in a total of 19 licenses, including two operatorships.

– 2011 will be an exciting year in the Barents Sea for North Energy as we participate in three exploration wells. In addition, an APA 2011 project has been established to repeat the past success in the Barents- and Norwegian Sea license award rounds, says North Energy CEO Erik Karlstrøm.

The company’s drilling campaign for 2011 starts with Norvarg (PL 535) in May. Next is Heilo (PL 530), directly followed by Zappfe (PL 518) and Jette (PL 385) in late 2011 or beginning 2012.

– Given discoveries in the exploration wells, drilling of sidetracks have been decided in Heilo and Zappfe. This will provide early and valuable appraisal information, reduce overall drilling cost and potentially reduce lead time to PDO by about two years, says Karlstrøm. With current market transactions, these sidetracks may prove to be very valuable activities.

Karlstrøm has high expectations to the Heilo well. He considers the probability of a discovery as high, and a discovery here may support new exploration wells in the three neighbouring licenses where positive drilling decisions have not yet been made. In the North Sea, positive developments in the Skagen license (PL 498) resulted in a drilling decision late 2010.

So far, North Energy has participated in the drilling of two wells, of which the gas condensate discovery in PL 433 Fogelberg in the Norwegian Sea has commercial potential. A new pipeline from Luva to Nyhamna might allow for an earlier than originally anticipated development of this discovery.

In the 4th quarter of 2010, North Energy recorded an after tax loss of NOK 45.7 million, against a loss of NOK 8.3 million in the same quarter last year. The change is a result of the company’s participation in the PL 341 Stirby exploration well during 4th quarter of 2010, where the well was classified as dry. In the same period, the company has renewed and expanded its exploration loan facility from NOK 300 million to NOK 760 million. North Energy’s exploration programme involving eight wells in the period 2010 to 2012 is therefore fully financed.

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Source:North Energy, February  22, 2011;