Noreco reached record levels both in revenue, oil production and results in 3Q 2008. EBITDA was NOK 580 million. Net result after finance and tax was NOK 135 million, which is more than triple the net results of 2Q.
Noreco is the second largest oil producer listed on the Oslo Stock Exchange. The Company's average daily production in the third quarter of 2008 was 15,400 barrels of oil equivalents per day (boed). The production in the fourth quarter is expected to be in excess of 14,000 boed, and as a consequence Noreco is increasing the production guidance for the full year 2008 to 12,750 boed.
Noreco has had a strong cash flow the past few months due to high production combined with stable performance and oil prices still at a high level. The Company had more than a billion NOK in cash by the start of 3Q. The cash balance has increased during 3Q, despite the fact that Noreco has financed all exploration activity with equity, reduced the reserve based debt with NOK 223 million, made semi-annual bond coupon payments and made significant investments on the fields.
Noreco has a solid financial position. The Company has secured a major part of the after tax expected production volume against oil prices below US $75 until 2011. Cash, existing borrowing facilities and the high cash flow from Noreco's production will finance all operations, investments and developments through to 2010.
Noreco's operational activities are progressing well. On the Huntington field, the partners are adjusting the plans due to two wells being drilled on the neighbouring block 22/14A. There is a high probability that these wells will prove the Huntington field to be larger than assumed. The partners still expect production to start in 2010, but selection of development solution will be moved to 1Q 2009 so that all important facts are available before the final decision is made.
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