Norway: Det Norske Records Q2 Loss of USD 7.75 Million

So far this year, Det norske oljeselskap ASA has created material value through exploration. The exploration results form the basis for strong growth in the years ahead. In July, a plan for development and operation (PDO) was submitted for Atla, and Det norske plans to decide on a PDO for Jette in September.

CEO Erik Haugane of Det norske is very pleased with the progress made so far this year.

“We have hit the jackpot. Since the first quarter, we have discovered resources corresponding to more than 100 million barrels of oil equivalents.

This means that we have taken a large step forward in relation to our production targets. Aldous Major South is probably the biggest oil discovery in Norway in 20 years, in which we own 20 percent.

We have a stake in the Krafla discovery south of Oseberg in the North Sea, which we expect the operator, Statoil, to develop quickly and at reasonable cost.

The discovery in Norvarg gives grounds for renewed hope and interest in the Barents Sea, and we also see a potential in connection with the discovery in Skalle.”

Exciting discoveries

The big discovery in Aldous Major South will mean a great deal to the company. According to conservative estimates, the discovery contains between 200 and 400 million barrels of oil, in which Det norske has a 20 percent stake.

In the second quarter, Det norske made some interesting discoveries in Krafla and Krafla West in the North Sea. The company owns 25 percent of these prospects, corresponding to between 12.5 and 20 million barrels. Statoil, the operator, has signalled rapid development at a low investment cost per barrel

The gas discovery in Norvarg in the Barents Sea is another positive development. Further appraisal wells are required in order to determine the size of the discovery. Preliminary estimates show recoverable gas volumes of between 10 and 50 billion standard cubic metres, in which Det norske has a 20 percent share.

In July, gas was also discovered in the Skalle prospect in the Barents Sea. Preliminary estimates show recoverable gas volumes of between 2.5 and 8 billion standard cubic metres, in which Det norske has a 10 percent share.

Development

The submission in July of the plan for development and operation (PDO) for Atla was a milestone for Det norske. Atla will be the company’s first development. Det norske has a 10 percent interest in the field, for which Total is the operator. Det norske’s share can amount to production of 1,000 barrels per day already from the end of 2012.

Det norske plans to decide whether to submit a PDO for Jette (previously called ‘Jetta’) in September 2011. The field extends over three licences in which Det norske has an aggregate share of approximately 61 percent. In operation, Jette could result in production of a further 8,000 barrels per day for Det norske from 2013.

The work on preparing a plan for development and operation for Draupne continues. There are two potential development solutions. As operator, Det norske is working closely with its partners to find the optimum solution.

“In the short term, Atla will be the first development in which we take part, and Jette looks like being our first self-operated development. Together, this will result in considerable production for us in the course of a few years,” says CEO Erik Haugane.

Finances

During the second quarter, Det norske produced 127,283 barrels of oil equivalents, or 1,399 barrels a day. On average, the oil was sold for a price of USD 116.3 per barrel. The cash flow from production amounted to NOK 41.1 million during the second quarter.

The company recorded a loss for the second quarter of NOK 42.2 million after tax, compared with a loss of NOK 104.8 million in the second quarter 2010. Exploration expenses amounted to NOK 177.8 million for the quarter, compared with NOK 367.2 million in the second quarter 2010.

At the company’s annual general meeting in April, Svein Aaser was elected to replace Kjell Inge Røkke as chair of the board of directors.

In order to rationalise the company’s operations, Det norske’s board of directors has decided to close down its office in Stavanger. Det norske has also decided to wind up the subsidiary Det norske oljeselskap AS.

42.2 Million Norwegian kroner = 7.7532372 Million  U.S. dollars

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Source: Det Norske, August 16, 2011;