Strong Final Quarter for Det Norske

Norwegian oil firm Det Norske reported Friday that 2011 was a "very good" year for the firm, with the company trebling its resource base and securing long-term financing.

In the fourth quarter, the Ministry of Petroleum and Energy decided that Aldous Major (PL 265) and Avaldsnes (PL 501) are to be jointly developed, and renamed this field
Johan Sverdrup. The field is one of the largest oil discoveries ever on the Norwegian Continental Shelf (NCS).
Det Norske reported that Statoil, as operator, lifted the estimates for the section of Johan Sverdrup located in Production License 265 to between 900 and 1,500 million barrels of oil equivalent. Det norske's share here equals approximately a quarter of a billion barrels.
In the fourth quarter, Det Norske solidified its financial position further by securing a new credit facility in the amount of up to $500 million. The company's equity was strengthened by approximately $79 million (NOK 450 million) as a result of conversion of an unsecured bond loan to shares. All combined this provides the company with a solid financial basis for developing projects such as Atla, Jette and Krafla, it said.
"We created great values during 2011, primarily due to the vast discovery on Sverdrup," said CEO Erik Haugane. "This, in conjunction with a sound financial platform, enables us to look forward with confidence to the first field development operated by Det Norske, Jette. During 2012 we will also submit a Plan for Development and Operation for Draupne. We are well on the way to becoming a fully fledged exploration and development company, and a major participant on the Norwegian Shelf."
In September Det Norske, as operator, submitted a Plan for Development and Operation (PDO) for Jette, the first development operated by the company. Development costs of Jette are estimated at $439 million (NOK 2.5 billion), and production is expected to start up in early 2013. The company anticipates the PDO to be approved during February 2012.
Det Norske aims to submit a PDO for Draupne this year. On behalf of the licensees in Draupne, Det Norske has entered into a three-year agreement with Maersk regarding the lease of a jack-up rig, valued at $413 million. Negotiations pertaining to a joint development of Draupne and Luno, located in an adjacent production license, are currently in progress.
The Plan for Development and Operation for Atla was approved in November, and start-up of gas production is scheduled for late 2012. Det Norske holds a 10 percent-interest in Atla.
During the fourth quarter of 2011, Det Norske produced 137,550 barrels of oil equivalent, achieving an average price of $110.80 per barrel. Cash flow from production was $8.2 million (NOK 47 million).
In the fourth quarter, the company had a net loss of $21.9 million (NOK 125 million). Total exploration expenses amounted to $18.4 million (NOK 105 million). At the close of the period, the company's net cash position amounted to approximately $228 million (NOK 1.3 billion), and the equity ratio at the end of the year was 48 percent.