Norwegian Energy Company ASA ("Noreco") announced its third quarter 2021 results. A strong third quarter delivered production of 27.2 mboepd, generating revenues of USD 150 million and adjusted EBITDA of USD 67 million.
- Hydrocarbon production of 27.2 mboepd
- Total Revenues of USD 150 million compared to USD 135 million in previous quarter
- Adjusted EBITDA of USD 67 million versus USD 60 million in Q2
- Net result for the period of USD 3 million compared to negative USD 20 million in Q2
- A positive net cash flow from operating activities of USD 84 million versus USD 19 million in the second quarter
- Net hydrocarbon production for the quarter of 27.2 mboepd is in the upper range of annual guidance of 25.5 – 27.5 mboepd. The Noble Sam Turner drilling program commenced a planned well workover and maintenance campaign earlier this year, delivering positive results on operating performance also during the third quarter. Activity levels on the Tyra project continue to be high, and during the quarter the Company took delivery of the Tyra East topsides from Sembcorp followed by a successful offshore installation at the Tyra field.
In September, the Company announced Project Bifrost, a Danish Underground Consortium (“the DUC”) partnership with Ørsted and DTU. Project Bifrost will focus on progressing the potential for Carbon Capture & Storage in Denmark and in specific the potential for CO2 transport and storage at the Harald field with expected startup storage capacity of 3 million tons of CO2 per year (m/tpa).
The financial result for third quarter continues to strengthen quarter on quarter, with revenues of USD 150 million and adjusted EBITDA of USD 67 million. The Company had total liquidity of USD 252 million at the end of third quarter, with cash on balance sheet of USD 152 million and available undrawn RBL capacity of USD 100 million. During the quarter, a successful written resolution was obtained from bondholders of NOR14 to amend certain covenants providing the Company with further headroom. Noreco also entered into a USD 1.0 billion swap transaction to fix interest rate exposure under the RBL facility.
David Cook, Noreco’s Chief Executive Officer stated, “Across our business we continue to deliver in line with expectations. Our visibility on the Tyra project’s progress is positive, and upon start-up the delivery from this world-class gas hub is a game-changer. We are reaping the benefits of strong operating performance as well as the current DUC wells program. And we are furthering our focus on the energy transition with the announcement of Project Bifrost. All this, plus the strong commodity macro, the support of the Danish North Sea Agreement and our own enviable resource position in the DUC define forward-looking potential within which we are well-positioned.”
“Compared to the beginning of the year, operational performance has improved significantly, and the Noble Sam Turner rig program continued to make a positive impact. So far in 2021 we have had five workovers completed, adding more than 5000 bpd. The Tyra Redevelopment project is progressing towards first gas, and further de-risked when the Tyra East Wellhead & Riser Platforms were delivered and installed during the quarter. In addition, we have now locked-in the 2022 sail away dates for the remaining fabrication of the project,” said John Hulme, Chief Operating Officer in Noreco.
“In addition to a quarter of strong underlying financing performance, we also further secured pre-Tyra flexibility in our capital structure. During Q3 we obtained a successful written resolution from our NOR14 bondholders, improving certain covenants and providing sufficient leverage covenant headroom. This, in addition to significant pre-Tyra price hedging, ensures our capital position is set to deliver the Tyra Redevelopment in a wide range of future market scenarios. At start-up, Tyra unlocks a real step-change for the Company and our stakeholders. With an expected production increase of 90 percent and a significantly increased gas exposure, the redeveloped project materially enhances our free cash flow generation potential,” said Euan Shirlaw, Chief Financial Officer in Noreco.