Det norske oljeselskap ASA is a stronger company after the merger with Aker Exploration. The company has consolidated its position as the second-biggest player on the Norwegian continental shelf in terms of exploration activities and the number of operatorships. The company’s financial position is strong.
Det norske oljeselskap ASA and Aker Exploration ASA were merged in the fourth quarter of 2009, with effect from 22 December. The merger resulted in a company with 67 licenses, of which 34 operatorships, 7 discoveries and interests in 4 producing fields.
The area for Det norske’s exploration activities was extended through the award of six operatorships and shares in ten licences in connection with the licence awards in predefined areas (APA) 2009. At the same time, the company has sufficient rig capacity to implement its exploration programme.
Extensive exploration activity
Det norske has been engaged in extensive exploration activity throughout 2009 as operator for nine wells. The drilling of three of these wells was completed during the fourth quarter.
The operator Statoil made a discovery in the East Frigg Delta prospect in PL 442 in which Det norske has a 20% interest. Following this discovery, the resources estimate of the operator has increased to between 60 and 190 million barrels of oil.
Drilling of the Geitfjellet prospect in PL 321 was completed in the fourth quarter, without discovering hydrocarbons. Det norske also drilled a dry exploration well in Skardkollen in PL 408.
Det norske drilled the Jetta prospect in PL 027D for ExxonMobil, the licence operator, and one small oil discovery was made. Det norske has subsequently taken over as operator for licence 027D, and it has a 65% interest in the Jetta prospect. The potential commerciality of the discovery, possibly in combination with other prospects in the area, is under evaluation.
Det norske had two rigs in operation during the fourth quarter: Aker Barents and Bredford Dolphin.
– We created substantial value in 2009, although there were disappointing results of the extensive exploration program in the Norwegian Sea. We will, as our people in the Olympics, winning gold although we have been in a difficult period. We will continue to be the most aggressive company on the Norwegian shelf in 2010 and look forward to many exciting drilling activities.
That was the comment from CEO Erik Haugane (picture) during the presentation of the fourth quarter.
He emphasized the prospect Balder Triassic and Dalsnuten. Det norske has just secured a share of ten percent in Dalsnuten.
Det norske had two rigs in operation during the fourth quarter: Aker Barents and Bredford Dolphin
Increase in production
Production from the Varg field in PL 038 increased to 26,800 barrels a day in December after the successful start-up of a new production well. The field is expected to produce around 18,000 barrels a day in 2010. Det norske has a 5% interest in PL 038.
Det norske’s average share of production in the fourth quarter was 1,951 barrels a day (2,128), sold at an average price of USD 73.4 per barrel (45.8).
Det norske aims to increase production to 15-20,000 barrels a day in the course of the next five years. Intensive efforts are being put into the new Plan for development and operation (PDO) for Frøy (PL 364). We aim to submit the new PDO in 2010 and start production from Frøy in the course of 2013.
At the same time, work is in progress to mature the development concept for Draupne and Hanz (PL 001B/028B). A delineation well will be drilled on Draupne during the first quarter of 2010.
The above two projects will be important to Det norske in the time ahead. The company will maintain its high level of exploration activity and will continue to be active in the market for licences.
– We are at a turning point for the company as we approach decisions about the development of Frøy, and continues the work with Draupne and Hanz, says Erik Haugane (CEO) at the Q4 presentation today.
In the fourth quarter, Det norske’s revenues from the sale of petroleum amounted to MNOK 73.4 (60.8). Operating revenues totalled MNOK 73.7 (363.9). Operating revenues for 2008 included revenues from the sale of Goliat and Yme.
The company had an operating loss of MNOK 626.2 million (compared with an operating loss of MNOK 361.4 during the same period last year). The loss was primarily due to net write down of previously activated licenses of MNOK 213.3 (400.4) and exploration costs in the amount of MNOK 393.0 (238.6).
The loss for the period was MNOK 379.3 (compared with a profit of MNOK 235.6 during the same period last year) after a positive tax expense of MNOK 241.7 (464.4). In the fourth quarter, there was a negative cash flow from investment activities of MNOK 498.5 (compared with a positive cash flow of MNOK 1,162.9 during the same period last year).
The group’s liquid assets amounted to MNOK 1,574.3 (1,468.3) at the end of the quarter. Tax receivables for disbursement in 2010 have been recognised in the amount of MNOK 2,060.1 (206.8) million.
The company is financially strong with an equity ratio of 50% (71%) and cash, cash equivalents and tax receivables amounting to MNOK 3,634.4 (1,675.1). Total assets amounted to MNOK 7,679.4 (5,218.1) at 31 December 2009. The group has interest bearing debt with a book value of MNOK 1,480.9 (0). This consists of a credit facility for exploration with DnB NOR Bank, and a convertible bond loan.
Find the Q4 Presentation here.
Find the Q4 2009 Report here.