Noreco Reports 4Q Earnings; Plans to Drill 6 Wells in 2010

Noreco has presented its fourth quarter 2009 results, with revenues of NOK 322 million and a net result of NOK - 87 million.

Oil and gas production was 5,775 barrels of oil equivalents (boe) per day, down from 9,725 boe/day in the previous quarter due to the shutdown of the Siri, Nini and Cecilie fields. Realized oil price was USD 68.5 per boe. Total revenues for the quarter was NOK 322 million, which includes NOK 115 million in expected insurance coverage, compared to revenues of NOK 355 million in the third quarter.

EBITDA was NOK 134 million, sharply up from NOK -51 million in the previous quarter driven by significantly lower exploration activity in the fourth quarter.

EBIT 63 million in the fourth quarter, sharply up form NOK -171 million in Q3.

Net financial items amounted to NOK -211 million. This included costs of NOK 105 million related to refinancing of bond loans during the quarter.

Tax for the quarter was NOK -61 million. The tax rate for the quarter was lower than average for the year due to low exploration activity, high financial cost and a positive impact of NOK 75 million related to recognition of a tax deficit in one of the company's subsidiaries.

During the quarter Noreco raised net NOK 1,216 million in new equity, and two new bond loans of NOK 2,000 million in total, and redeemed its previous bond loans NOR01 and NOR02 in Q4 at nominal value of NOK 2,240 million.

Following the equity issue, the company's total equity is the strongest ever at more than NOK 3,7 billion. The bond refinancing has given an extended repayment profile which fits well with the company's investment plans and phasing in of new fields.

At the end of 2009, proven and probable (2P) reserves were 37.2 million boe. This represents a reserve replacement ratio of 222%. The main contribution to the reserve base in 2009 was the Oselvar field with 7.8 million boe to Noreco.


2010 production is estimated to be in the range 13,000 - 14,000 barrels per day. Production has restarted from Siri, Nini and Cecilie and the experience so far gives support to this estimate. Two new wells have been brought on stream at Nini, and through 2010 there will be further production drilling at Brage and South Arne. In addition, the newly developed Nini East field is currently being commissioned and is expected to start production within a week or two.

The company is planning to participate in drilling of six exploration and appraisal wells this year, of which one - the dry Frusalen well - has already been completed. Field development activity is high with the Oselvar development well underway, and with concept selection as the next milestone for both the Huntington and Nemo projects.