Second Quarter Report 2011
Norse Energy Corp. ASA ("NEC" ticker code OSE - NEC, Oslo, Norway, U.S. OTCQX symbol "NSEEY") and its subsidiaries ("Norse Energy" or "the Company") reports revenue of USD 3,153 million and EBITDA of USD -3,650 million for the quarter.
Second Quarter Highlights
The Preliminary Revised Draft Supplemental Generic Environmental Impact Statement (“dSGEIS”) was released 8 July 2011 by the New York State Department of Environmental Conservation (the “DEC”). The SGEIS will set the regulatory framework for the development of natural gas shale formations in the state of New York. A 60 day public comment period is expected to commence in September, followed by final review and issuance of the SGEIS.
Three new Herkimer wells were completed in the second quarter, bringing the total number of wells drilled on 3D seismic to eight. These eight wells delivered an average thirty day initial production rate (“IP-30”) of ~1,000 Mcf/d.
The Company and its bondholders agreed to changes in the Loan Agreements for the NEC02, NEC03, NEC04, and NEC05 bonds. The change reinstates Norse Energy Corp ASA as the borrower and places Norse Energy Holdings Inc. in a guarantor position. The changes were executed on 5 July and enable the bondholders to avoid a 30% US withholding tax.
Subsequent Events
In July, the Company decided to suspend Herkimer drilling to preserve cash and focus resources on potentially more profitable shale development.
The Company announced the purchase of USD 8.0 million nominal value of NEC 02 bonds on 22 August in open market purchases at a discount from par.
Key Figures
E&P gross production was 6,645 Mcf/d (1,184 Boe/d) in Q2-11, a decrease of 8% from 7,186 Mcf/d (1,281 Boe/d) in Q1-11 and down 8% from 7,190 Mcf/d (1,282 Boe/d) in Q2-10 because the decline of the existing production exceeded production from the new wells.
E&P net production was 4,774 Mcf/d (851 Boe/d) in Q2-11, a decrease of 5% from 5,008 Mcf/d (893 Boe/d) in Q1-11 and a decrease of 21% from 6,043 Mcf/d (1,077 Boe/d) in Q2-10. The year over year decline is caused by approximately 1,400 gross Mcf/d (~1,100 net Mcf/d) shut-in awaiting access to gas processing equipment.
EBITDA for the second quarter was USD -3.7 million compared with USD -4.6 million in Q2 2010. EBITDAX for the second quarter was USD -2.6 million compared with USD -2.5 million in Q2 2010.
Impairment in the quarter was USD 3.9 million largely attributable to low market prices, decline in reserves, capital expenses, and production expenses.
Please find attached the second quarter report and the investor slide presentation. The presentation will be broadcasted live from Shippingklubben in Oslo on August 31 from 08:30, and can be seen using the following link: http://webtv.hegnar.no/webcast.php?id=22226
For further information, please contact:
Richard Boughrum, Chief Financial Officer
Cell: +1 714 520 1702
Email: rboughrum@norseenergy.com