Norwegian junior oil firm North Energy announced Wednesday that it will be looking at further cost-cutting measures due to two dry wells and "persistently difficult market conditions".
The firm drilled two wells during the second quarter, but neither of these – the Zumba prospect in the Norwegian Sea and the Haribo prospect in the North Sea – were found to contain commercial hydrocarbons.
North Energy posted a net loss of NOK 34 million ($4.1 million) for the second quarter, compared with a NOK 29.1 million ($3.5 million) loss in 2Q 2014. This related primarily to exploration and licence costs of roughly NOK 25.6 million after tax. The company had a net cash position of NOK 261 million ($31.3 million) at 30 June, including tax receivable less exploration loan debt.
"Given the difficult market conditions facing the industry and the fact that we're still seeking our commercial breakthrough, we must as a responsible company consider further measures to reduce costs," North Energy Acting CEO Knut Sæberg said.
"At the same time, our threshold for taking on future investment commitments is being raised. We'll be guarding our cash position well."
Earlier this month the company announced the spud of a new well on the Tvillingen South prospect in the Norwegian Sea, while another well is expected to spud later this year on the Ørnen prospect in the Barents Sea.
"Tvillingen South is a candidate for a possible tie-back to Kristin should a discovery be made, while Ørnen represents a substantial oil prospect in the Barents Sea," Sæberg said.
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