Noreco Update on Huntington Licence
Norwegian Energy Company ASA (Noreco) reports that its UK subsidiary, Noreco Oil UK, has been served a notice of default (the Notice) under the Joint Operating Agreement (JOA) governing the Huntington licence.
Post the completed restructuring in April 2015, Noreco retained Stellar Energy Advisors to sell its 20% participating interests in the Huntington licence. This process has now been terminated as no acceptable offers were received.
The default relates to non-payment of a cash call under the JOA, and implies that Noreco Oil UK will no longer receive revenues from production on the Huntington field.
Furthermore, as Noreco Oil UK will not remedy the default, the JOA specifies that the remaining partners are entitled to exercise forfeiture rights in respect of Noreco Oil UK’s 20% interest in the licence on a pro-rata basis at the end of a 45 day period. Noreco is working constructively with its licence partners to determine next steps in relation to its licence interest in a consensual manner.
The accounting effect of the expected forfeiture compared to the Q2 report, is an additional loss of an estimated NOK 60 million. The total loss for Noreco related to the investment in Huntington will after this amount to approximately NOK 590 million.
