Noreco is also pleased to announce that the sale of its interest in the South Arne field has been completed as the company yesterday received full payment of NOK 1.1 billion. The transaction is included in the result from discontinued operations in the third quarter.
Noreco had revenues of NOK 194 million from continued operations in third quarter 2011, an increase of 10 percent compared to third quarter 2010, driven by higher oil prices which more than compensated for lower production volumes.
Production in the quarter was 3,428 barrels of oil equivalents per day (boed), down from 4,101 boed (excluding divested fields) for the corresponding period the previous year. The reduction is mainly due to lower production regularity.
The achieved oil, gas and NGL prices adjusted for the cost and income from the put options expiring in the quarter was USD 110 per boe, compared to USD 75 per boe in third quarter 2010.
EBITDA (earnings before interests, tax, depreciation and amortisation) in third quarter was negative by NOK 45 million, compared to a negative EBITDA of NOK 30 million in third quarter 2010. Tax amounted to an income of NOK 46 million. Noreco recorded a net loss of NOK 393 million for the quarter, compared to a net loss of NOK 60 million in third quarter 2010.
Noreco reported an equity ratio of 24.6 percent at the end of the quarter, which is below the equity ratio covenant of 25 percent in its bond agreements. The covenant has to be breached for two consecutive quarters in order to constitute a default. The company expects an equity ratio above 25 percent in the fourth quarter as a result of completion of already announced asset sales. This will also further strengthen the company's liquidity and provide the company with the necessary financial flexibility to consider additional debt reduction in the future.
The new Board of Noreco is pleased with the work that has been carried out during the quarter with the purpose to improve the company's financial position and streamline its organisation and operations. This work will continue towards the start of new production next year. It is the Board's opinion that the company is now well prepared to embark on value creating activities by focusing on operations, project execution and the company's interesting exploration program.
The third quarter report and presentation are attached. The documents are also available for download at www.newsweb.no and www.noreco.com.
Noreco will present the results for third quarter 2011 today at 08:30 CET. The presentation will be held by CEO Einar Gjelsvik, and will take place at Felix Kurs og Konferansesenter, Bryggetorget 3, Oslo. The presentation can also be followed by webcast on Noreco's web page www.noreco.com both live and in archived version.
Einar Gjelsvik, CEO, +47 99 28 38 56
Kjetil Bakken, VP Investor Relations, +47 91 88 98 89