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available on the Company’s website, www.noreco.com. In addition, the Company
will seek to engage in bondholder discussions regarding the addition of further
covenant headroom under its NOR14 Senior Unsecured Bond agreement.
The Company’s second quarter financial statements will, as planned, be released
to the market on 13 July 2021. The Company has not completed its second quarter
2021 financial reporting. The estimates provided in this release are therefore
subject to change and the second quarter financials may deviate from the
information provided herein.
Financial
· Strong liquidity position of USD 272 million at 31 May 2021, consisting of
undrawn RBL capacity of USD 178 million based on the Company’s current Borrowing
Base and cash on balance sheet of USD 94 million
· Successful closing of new USD 1.1 billion RBL facility with existing and new
lenders. This new facility, which has a seven-year term and amortizations from
the second half of 2024, replaced the Company’s prior USD 900 million facility.
This provides additional liquidity while also loosening the pre-Tyra leverage
covenant and is a strong testimony to Noreco’s underlying assets and business.
The semi-annual redetermination of the RBL Borrowing Base is currently ongoing
and is expected to be announced end of June 2021, with the Company anticipating
the facility’s cash drawing capacity to remain above USD 1 billion
· Due to favorable gas market conditions and to further safeguard pre-Tyra
cash flow, during Q2 2021 to date the Company entered into additional price
hedging agreements of 1.2mm MWh at EUR 29/MWh for Winter 2021 / 2022
The information provided above includes certain alternative performance measures
(“APMs”). These APMs are consistent with those used in the Company’s annual and
quarterly financial statements and reference is made to the Company’s first
quarter 2021 financial statements.
Operational
· Net production of approximately 27.3 mboepd during the first two months of
the second quarter, in the upper range of the Company’s annual guidance of 25.5
- 27.5 mboepd
· Operational efficiency of 83.5 percent during second quarter
· The Noble Sam Turner rig program for planned well workovers and well
maintenance continues to have a positive impact on operating performance
Tyra Redevelopment
· High activity levels ongoing during 2021 are progressing the project
significantly towards first gas
· Fabrication of the two wellhead and riser platforms (WHRP) and the
processing and accommodation modules takes place on three yards
· Sembcorp Marine (Singapore): WHRP for Tyra East and Tyra West. Fabrication
of the Tyra East WHRP is close to complete and the transport vessel arrived at
the yard 20 June. The Tyra West WHRP is progressing towards sail away and
installation during 2022. The temporary shutdown of the yard in May this year
due to COVID-19 only had a limited impact on the Tyra project. As such the
current progress at Sembcorp is not expected to create a risk to the first gas
date
· McDermott (Batam, Indonesia): Processing module. Due to high frequency of
COVID-19 cases in the area, enhanced precautionary measures have been
implemented to minimize exposure and new cases. As a result, parts of the
fabrication of the process module have progressed slower than expected. However,
built-in contingency still allows the process module to sail away during 2022
· Rosetti Marine (Ravenna, Italy): Accommodation module. Due to COVID-19
impacts, fabrication is progressing slower than originally planned. Several
strategic alternatives related to sail-away timing are currently being assessed,
with no scenarios under current estimates that are expected to create a risk to
first gas date
· Tyra budget: The official budget of gross DKK 21 billion has not been
revised since FID in 2017. However, and mainly driven by COVID-19, the Company
is seeing upward pressure on costs. While the Danish Underground Consortium
partnership (the “DUC”) has not yet revised the official Tyra budget, Noreco as
a non-operated partner internally assumes an estimated project cost of DKK 22
billion based on the Company’s independent assessment of information provided by
the operator
· While the global COVID-19 pandemic continues to be a challenge, including at
fabrication yards, Noreco expects the ongoing proactive mitigation and
preparedness strategies being exercised will safeguard the Tyra first gas date
in Q2 2023
NOR14 Covenant Headroom
Noreco has significantly strengthened its capital structure during 2021 through
the refinancing of its RBL facility, providing additional liquidity and
deferring amortization payments into the second half of 2024.
Using current forecasts, the Company does not expect to breach NOR14’s maximum
leverage ratio during the Tyra Redevelopment period based on forward curve
pricing assumptions. However, Noreco would like to add additional headroom
under this financial covenant to reduce exposure to future market volatility and
further secure delivery of Tyra. The Company believes refocusing the covenants
on liquidity enhances the NOR14 bondholders’ position as this measure more
closely corresponds to the core of Noreco’s underlying credit story in the
period prior to Tyra recommencing production. It will also better reflect the
revised RBL facility, where the pre-Tyra leverage covenant was relaxed with no
impact on margin. Additionally, Noreco intends to address the leverage covenant
impact of the shift in Tyra first gas to Q2 2023 that was announced in November
2020.
The Company is seeking to engage in a dialogue with bondholders and has
appointed Arctic Securities and Pareto Securities to assist with this process.
Contact:
Euan Shirlaw, Chief Financial Officer
Phone: +44 7979 690622
Email: es@noreco.com
Cathrine Torgersen, EVP Investor Relations & Communications
Phone: +47 91 52 85 01
Email: ct@noreco.com
About Norwegian Energy Company ASA
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.
IMPORTANT NOTICE
This?announcement is not and?does not form a?part of any offer to sell, or a
solicitation of an offer to purchase, any securities of Norwegian Energy Company
ASA. The distribution of this announcement and other information?may
be?restricted by?law in certain jurisdictions. Copies of this announcement are
not?being made and may not be distributed?or sent into?any jurisdiction in?which
such distribution would be unlawful?or would require registration or
other?measures. Persons into whose possession?this announcement or such other
information should come are required to inform themselves about and to observe
any such restrictions.
FORWARD LOOKING STATEMENTS. Matters discussed in this announcement include
forward-looking statements. Forward-looking statements are statements that are
not historical facts and may be identified by words such as “believe,”
“expect,”, “plans”, “anticipate,” “intends,” “estimate,” “will,” “may,”
“continue,” “should” and similar expressions. Forward-looking statements include
statements regarding: objectives, goals, strategies, outlook and growth
prospects; future plans, events or performance and potential for future growth;
liquidity, capital resources and capital expenditures; economic outlook and
industry trends; commodity prices and developments in the Company’s markets. The
forward-looking statements in this announcement are based upon various
assumptions, many of which are based, in turn, upon further assumptions,
including without limitation, management’s examination of historical operating
trends, data contained in the Company’s records and other data available from
third parties. Although the Company believes that these assumptions were
reasonable when made, these assumptions are inherently subject to significant
known and unknown risks, uncertainties, contingencies and other important
factors which are difficult or impossible to predict and are beyond its control.
Such risks, uncertainties, contingencies and other important factors could cause
the actual results of the Company or the industry to differ materially from
those results expressed or implied in this announcement by such forward-looking
statements. No representation is made that any of these forward-looking
statements will come to pass or that any forecast result will be achieved and
you are cautioned not to place any undue influence on any forward-looking
statement.
The information, opinions and?forward-looking statements contained in this
announcement speak?only as at its date?and are subject to change without notice.
The Company?does not undertake any?obligation to review, update, confirm,?or to
release publicly any revisions to any forward-looking statements to?reflect
events that occur or circumstances that arise in relation to the content of this
announcement.
No representation is made as to the accuracy or completeness of this
announcement and none of them accepts any responsibility for the contents of
this announcement or any matters referred to herein.
This?announcement is for information purposes only and is not to be relied upon
in substitution for the exercise of independent judgment. It is not intended as
investment advice and under no circumstances is it to be used or considered as
an?offer to sell, or a solicitation of an offer to buy any securities or a
recommendation?to buy or sell any?securities in the Company. No liability
arising from the use of this announcement is accepted.
This information is considered to be inside information pursuant to the EU
Market Abuse Regulation, and is subject to the disclosure requirements pursuant
to Section 5-12 the Norwegian Securities Trading Act.
This stock exchange announcement was published by the contact persons above in
Norwegian Energy Company ASA on 28 June 2021 at 16:30 (CEST).
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