Noreco provides market update
(Thomson Reuters ONE) -
Stavanger, 10 June 2011: Norwegian Energy Company ASA (Noreco) has over the
recent days seen substantial movements in its share price, and would like to
clarify the company's position with regards to its financial situation and
certain ongoing activities.
At the end of first quarter 2011, Noreco had NOK 490 million in cash and cash
equivalents. In April the company issued a new NOK 600 million bond. In May the
company entered an agreement to sell its shares in the oil fields Brage and Hyme
for a consideration of USD 85 million. This transaction is expected to be
completed this summer. Combined with expected earnings from the oil production,
this provides the company with sufficient liquidity to meet its commitments and
complete its ongoing investment program in field developments and exploration
wells.
The company had a book equity ratio of 26.7 percent at the end of the first
quarter. One of the covenants in the bond loan agreements requires the company
to keep this equity ratio above 25 percent. It would require a breach in two
consecutive quarters before a potential default may be declared. There are no
current indications that Noreco will breach the covenant as the company's
liquidity gives flexibility to reduce debt if necessary. Over time the company
intends to strengthen the equity ratio, a.o. by considering further asset sales.
Noreco has a 20 percent interest in the Huntington field in U.K. which is
currently under development. The field will be produced with the floating
production unit Sevan Voyageur, which is now being upgraded for the Huntington
assignment. The Voyageur is owned by Sevan Marine, which has announced cost
overruns for the upgrade of the Voyageur. The Huntington partnership has an
extensive system of agreements with Sevan Marine and other relevant
stakeholders. These agreements imply that the Huntington partnership does not
carry the risk of cost overruns, and secure the partnership rights to access the
Voyageur and to exercise control over the upgrade project in the event that
Sevan breaches certain conditions. Noreco has previously assumed production
start from Huntington during first quarter 2012. In light of the recent
developments there is now some risk of a moderate delay to this schedule.
At the Siri field in Denmark, work is still ongoing regarding a permanent repair
of the platform. Different solutions have been proposed, with substantial
variation in scope and cost. Dong Energy and Noreco each own 50 percent of Siri
and the final investment decision will therefore require unanimity. The parties
have a constructive dialogue and are actively working to find a safe and cost
efficient solution.
Noreco is currently producing around 10,000 barrels oil equivalents (boe) per
day from eight fields in Denmark and Norway. After the sale of Brage, the
estimated production for this year is around 7,000 boe per day. Next year the
company will start production from the new fields Huntington and Oselvar, which
will contribute to significant earnings growth and a stronger financial
position. Noreco also has an extensive exploration programme with a substantial
value creation potential, and will participate in up to eight exploration wells
in the second half of 2011, pending rig schedules.
Contacts:
Einar Gjelsvik, CEO (+47 992 83 856)
Kjetil Bakken, VP Strategy & Investor Relations (+47 91 889 889)
This information is subject of the disclosure requirements acc. to §5-12 vphl
(Norwegian Securities Trading Act)
This announcement is distributed by Thomson Reuters on behalf of
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(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: NORECO via Thomson Reuters ONE
[HUG#1522696]
Unternehmensinformation / Kurzprofil:
Datum: 10.06.2011 - 09:31 Uhr
Sprache: Deutsch
News-ID 55482
Anzahl Zeichen: 4399
contact information:
Town:
Stavanger
Kategorie:
Business News
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