Noreco announces second quarter and first half year 2020 results

21 August
2020, Q3

Oslo, 21 August 2020: Norwegian Energy Company ASA (“Noreco” or “the Company”) today announced its second quarter and first half year 2020 results. 

The second quarter results demonstrate Noreco’s resilience, both financially and operationally. The Company’s financial performance remains strong, despite recent volatility with an adjusted EBITDA of USD 96 million and an operating cash flow of USD 78 million during the quarter. Net hydrocarbon production was 27.9 mboepd, in line with Company guidance.

Highlights: 
•    Net production of 27.9 thousand barrels of oil equivalents per day ("mboepd")
•    Adjusted EBITDA of USD 96 million 
•    Cash flow from operating activities of USD 78 million 
•    Successful completion of RBL redetermination with significant increase in borrowing base
 

The operational performance of the Company during the second quarter was as predicted and in line with Company guidance with net production of 27.9 mboepd. The early and proactive approach taken by the DUC operator to mitigate the impact of the pandemic continued to safeguard business continuity. The Tyra Offshore Decommissioning Campaign was safely and successfully executed according to plan. This campaign included the removal of wellhead and riser platform topsides, as well as the production platform topsides. Importantly, more than 95 percent of the production topsides are to be recycled.

The financials for the second quarter demonstrate the significant value of Noreco’s hedging arrangements.  Price protection, with liquids production fully hedged for 2020, supported revenues of USD 135 million and a realised liquids price of USD 66.5 per barrel, more than a 110% premium to average dated brent during the same period. Further, the contribution from the volume protection arrangements with Shell allowed the Company to generate USD 96 million of adjusted EBITDA during the second quarter.  A successful semi-annual RBL redetermination was completed in June, with an increase of USD 188 million in the Company’s borrowing base, a testament to Noreco’s long-term value proposition. Additionally, no impairment of the Company’s assets was required even in the challenging environment.  
 

“Noreco’s second quarter results prove, as they have since the completion of the acquisition in 2019, our ability to deliver reliable and consistent results. The predictable performance of our assets and operations, as well as the solid foundation of our capital structure enable the Company to continuously deliver strong outcomes. From this foundation we will continue to focus on production and operating efficiencies while considering value-adding alternatives – both inside and outside of the DUC,” said David B. Cook, Chief Executive Officer for Noreco.

The report may be downloaded from the Company’s website www.noreco.com or www.newsweb.no.  

The Company will present its quarterly results in a webcast today at 14:30 CEST. 

To join webcast:  https://channel.royalcast.com/webcast/hegnarmedia/20200821_1/