Financing update and revised restructuring proposal

Stavanger, 4 February 2015: Reference is made to previous stock exchange notices from Norwegian Energy Company ASA ("Noreco" or the "Company") related to its financial restructuring efforts. Today, the Company is presenting a revised restructuring proposal.

The work on a comprehensive financial restructuring started in October 2014. On 15 December 2014, the Company informed that it would not pay interest and amortisation as outlined in its bond loan agreements and announced an initial restructuring proposal for the Company’s bond loans. Other creditors were not affected by the proposed solution.

Since then the Company has continued to be in dialogue with Nordic Trustee and its advisors, as well as representatives for an ad hoc committee of bondholders, with the purpose of arriving at an agreed solution for a financial restructuring and a way forward for Noreco. The Company's objective for the discussions has been to create a sustainable solution whereby the Company’s operations and asset values could be preserved and realised for all financial stakeholders.

Status
“In parallel we have carefully reviewed the planned activities in our licences in light of the low oil price and we have identified a number of actions that have substantially reduced costs and improved our financial situation and outlook. Whereas our cash forecast for end 2015 before any bond payments in our previous proposal was negative NOK 12 million, our projections now show positive NOK 214 million,” says Tommy Sundt, CEO of Noreco. He adds: “Like most of our peers, we will continue to focus on cost reductions and keep commitments at a minimum going forward.”

Despite these mitigating actions and the continued discussions, it has as of today not yet been possible to reach consensus from sufficient members of all four bond groups for a pre-agreed restructuring proposal. In light of the severity of the Company's financial position, the Board has therefore found it necessary to update the market and present a revised restructuring proposal without further delay.

The proposal
“The dialogue with Nordic Trustee and the four bondholder groups regarding the restructuring proposal has been constructive and has provided important feedback, which has resulted in a modified proposal that the Company believes should be acceptable to all stakeholders,” says Silje Augustson, Chair of the Board of Directors of Noreco.

In the current proposal, which is based on a solution that has been discussed between the bondholder groups, the Company will be converting approx. NOK 1.9 billion of bond debt to equity with approx. NOK 1.2 billion of bond debt remaining on amended terms, including amended maturities, with possible payment-in-kind interests and no fixed amortisations except final maturity in three years, but with “cash sweep” if cash should become available. NOR06 will change borrower to Noreco Norway AS without any recourse to the parent company or other parts of the group. The three bond loans NOR10, NOR11 and NOR12 will be converted into a new NOK 600 million senior secured bond loan of Noreco. Following the proposed conversion, the holders of the converted bonds will own 92 per cent of the outstanding shares of the Company.

“If approved, the proposed solution will be providing a financial platform that will allow Noreco to safeguard and optimise the Company’s assets in a challenging market environment,” says Ms. Augustson.

Next steps
Completion of the restructuring remains subject to approval by qualified majorities of bondholders in the Company's four bond loans as well as by the Company's shareholders. Summons for bondholders' meetings and shareholders' meeting will be dispatched in due course, with applicable notice periods being ten business days and three weeks, respectively. Discussions with bondholders, shareholders and other stakeholders will continue, and the Company will use the time up to these meetings to seek consent for the proposal, as well as continue the work to improve the financial outlook of the Company.

In particular, the ad hoc bondholder committee has stated that their consent to any restructuring proposal will require that the costs and cash flows related to the Company's operations in Denmark are improved. This will need to be subject to parallel discussions also with key operators and licence partners in the weeks leading up to the bondholders' and shareholders' meetings. Pending such discussions and an agreed overall solution, the bondholders have instructed the Company to not make payments on its Danish licences. As a consequence, one of Noreco’s Danish subsidiaries is currently in breach of its obligations on the Nini-licence, and will until a solution is found only make payments of critical nature.

For further and detailed information on the restructuring proposal, including terms, implications and recoveries for each of the bonds, please see the presentation attached hereto which also includes as updated information on the Company's financial position and cash flow.

Contact:
Silje Christine Augustson, Chair of the Board. Tel.: +47 992 83 900
Tommy Sundt, CEO. Tel.: +47 992 83 900
Odd Arne Slettebø, CFO. Tel.: +47 992 83 900
Geir Arne Drangeid, IR contact. Tel.: +47 913 10 458

Financial advisors to Noreco:
Arctic Securities – Corporate Finance; Tel +47 21 01 32 33, +47 21 01 31 12
Pareto Securities – Corporate Finance; Tel +47 22 87 87 48, +47 22 87 87 77

Or email: investorrelations@noreco.com

This information is subject of the disclosure requirements pursuant to section of 5-12 of the Norwegian Securities Trading Act

***

About Norwegian Energy Company ASA

Noreco is an independent Norwegian oil company. The company's focus is to explore, develop and produce oil and gas in the North Sea region. Since incorporation in 2005, the company has grown through licensing rounds, exploration and acquisitions. Noreco operates in Norway, Denmark and United Kingdom, and employs 49 oil and gas professionals. Noreco is listed on the Oslo Børs (ticker NOR). For further information, please visit: www.noreco.com.

About Us

Noreco is a publicly owned company with focus on the oil, gas and offshore industry. The company's shares are listed on the Oslo Stock Exchange (ticker NOR). For further information, please visit: www.noreco.com.