Noreco Oil UK Receives Huntington License Default Notice

Norwegian Energy Company ASA (Noreco) announced Monday that its UK subsidiary, Noreco Oil UK, has been served a notice of default under the joint operating agreement governing the Huntington license in the central North Sea.

The default relates to non-payment of a cash call under the JOA, and suggests that Noreco Oil UK will no longer receive revenues from production on the Huntington field. As Noreco Oil UK is not expected to remedy the default, the JOA specifies that the remaining partners are entitled to exercise forfeiture rights in respect of the company’s 20 percent interest in the license on a pro-rata basis at the end of a 45 day period.

Commenting on the default notice, Noreco stated on its website:

“Noreco is working constructively with its license partners to determine next steps in relation to its license interest in a consensual manner.”

The expected forfeiture is expected to result in an additional loss of an estimated NOK 60 million ($7.09 million), according to Noreco. The total loss for Noreco related to the investment in Huntington will, after this, amount to approximately NOK 590 million ($69.73 million). The company had been trying to sell its participating interest in the Huntington license, although this process was terminated as no acceptable offers were received.