Noreco sues the insurance companies

Commencement of legal action for substantial monetary damages

Norwegian Energy Company ASA, Noreco Oil Denmark A/S and Noreco Petroleum Denmark A/S ("Noreco") have initiated a legal action for damages at the Court in Hillerød, Denmark, against the 20 insurance companies ("Insurers") who were ordered by the Danish Maritime and Commercial Court in December 2016 to pay a total insurance sum of USD 344.332.445 plus legal interest of approximately USD 125 million as well as legal costs of DKK 18.592.510 to Noreco.

Noreco's claim is that the Insurers must indemnify the losses suffered by Noreco in connection with the Insurers' unjustified rejection of insurance coverage of the Siri platform including Noreco's losses in connection with a costly refinancing of loans forced by the Insurers rejection, resulting in significantly increased interest expenses, the loss in connection with the sale of the Siri platform shares and Noreco's loss in connection with the agreement for essential third party litigation funding to pursue the claims for the damage relating to the Siri platform. Preliminary, Noreco does not calculate its loss in terms of value yet, as Noreco await the delivery of the judgment in the pending appeal of insurance case at the Danish Eastern High Court.

In the legal action for damages Noreco alleges that the Insurers have acted tortious (bad faith) in contravention to Danish Law, in connection with their handling of the insurance claims leading to grave consequences for Noreco. Noreco supports this with the following listed allegations:

• The Insurers have rejected insurance coverage with reference to views which Insurers knew or should know were not legally valid. Thus, Insurers have argued, in contravention to clear policy wording to the opposite, that the claims-occurrence basis applies in the policy, just as Insurers, despite of extensive documentation, have argued that there was no imminent risk of loss or damage in relation to the observed damages on the platform in 2009. 

• The Insurers have relied on several exclusions in the policy without sufficient proof and explanation of why the specific exclusion would apply on the matter. This, irrespective of Insurers' knowledge of the fact that the burden of proof in this case lies with them.

• The Insurers have consistently refused to make payments on account, even though an application of several of the exclusions in the policy only entitled Insurers to make a deduction in the insurance claims and therefore did not entitle to a complete rejection of insurance coverage.

• The Insurers have continually in the case handling demanded unnecessary supplementary and often non-specified evidence of Noreco's insurance claims to delay their payment obligations. This is especially relevant in view of the fact that the Maritime and Commercial Court has established that there was sufficient evidence of Noreco's valid claims at the first notification of the three claims (Sue and Labour claim, Section 1 claim and LOPI claim).

• According to Noreco, the Insurers have not taken new information and evidences that Noreco in the process have presented to substantiate their insurance claims into consideration.

• The Insurers have not taken any steps for the purpose of progress and clarification in the case. Instead, such initiatives have been put on Noreco contrary to an ordinary and orderly procedure in national and international insurance cases.

• In several events, the Insurers have tried to cut off further discussions about insurance coverage, among others with the argument that there are significant (non-identified) disagreements between the parties.

• The Insurers have been unwilling to engage in conciliation proceedings

• Despite the clear judgment by the Maritime and Commercial Court in favor of Noreco, and subsequent refusal of the Danish Supreme Court to hear the case, the Insurers have appealed the judgment to the Danish Eastern High Court without conceding Noreco a single point of view and without this giving rise to even a smaller payment on account.

Due to the connection between the legal action for damages and the pending insurance court case at the Eastern High Court it will be requested that the legal action for damages is being suspended until ruling is made in the insurance court case.

Contact

Riulf Rustad

Chairman

Tel.: +47 90 08 77 03 or email: investorrelations@noreco.com

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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. Noreco is listed on the Oslo Børs (ticker NOR). For further information, please visit: www.noreco.com.