Norwegian Oil Firm Noreco to Restructure
OSLO, Dec 15 (Reuters) – Norwegian oil firm Noreco proposed a restructuring as low oil prices and persistent production problems at its key assets are threatening its ability to remain a going concern, it said on Monday.
Noreco, which holds stakes in a handful of British, Norwegian and Danish fields, said it needs to fully convert its outstanding bond debt as it was burning through cash rapidly and cannot pay interest or service its debt.
"Noreco's financial situation and outlook has continued to deteriorate due to the significant and continued drop in oil prices, increases in projected operating costs and accelerated retention of cash to cover future abandonment costs," the firm said in a statement.
Brent crude prices fell by more than 40 percent since June and analysts see oil prices settling under $80 per barrel for an extended period.
"The board's current assessment is that full conversion of bond debt is necessary to maintain going concern and to create a sustainable solution where values can be best preserved and underlying values realised for all financial stakeholders," it added.
It estimated its cash shortfall by the end of 2015 at around 1.4 billion crowns ($190 million) and said its 3.1 billion crown debt and accumulated interest cannot be supported by cash flow and asset values.
The firm added that Erik Henriksen, its board chairman elected in October, announced plans to resign.
It also said that its biggest asset, the E.ON operated Huntington field would stay offline longer than earlier expected while the field's operating costs are likely to increase.
(Reporting by Balazs Koranyi, editing by Terje Solsvik)
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Det Norske to Acquire Noreco's Norwegian Portfolio (Mar 02)
- Noreco Oil UK Receives Huntington License Default Notice (Nov 02)
- Noreco CEO Steps Down (Oct 13)