Noreco opts to exit South Arne field in North Sea

Offshore staff

STAVANGER, Norway – Norwegian Energy Co. (Noreco) has agreed to sell its interests in the producing South Arne oil field in the Danish North Sea to operator Hess Denmark for $200 million.

The transaction is subject to approval by Danish authorities.

South Arne entered production in 1999. The current South Arne Phase III development comprises two new wellhead platforms and 11 new wells. Noreco has a 6.56% interest in the field.

CEO Einar Gjesvik said: “We are currently in the midst of a substantial investment program which will bring on 8-9,000 b/d of new production next year. Portfolio changes are a natural part of this program.

“Over the last months Noreco has entered agreements to sell assets for more than NOK 1.5 billion ($270 million) in total, and correspondingly also reduced the future investment commitments by a significant amount. The result is a stronger financial position and a significantly reduced financial and operational risk of the company.”

Noreco has also agreed to divest its interest in the DONG Energy-operated Siri field in the Danish sector. Here production was recently shut down for 17 days due to leakage in a riser between the Siri platform and a subsea storage tank. The produced oil is currently being offloaded directly onto tankers, pending repairs.

Elsewhere in the Danish sector, Noreco has a 12% stake in the Maersk-operated Gita offshore discovery, where seismic re-processing is under way, involving four different surveys and aiming at pre-stack depth migration to improve depth imaging. The latter is important for planning of appraisal wells.

In the southern Norwegian North Sea, development of the DONG-operated Oselvar field in license PL274 (Noreco 15%) is well advanced.

Drilling of production wells started in June, along with marine installation works. The topside module has been completed and was lifted on board the host Ula platform late May. Noreco expects start-up from Oselvar during the first half of 2012.

Another Norwegian North Sea discovery, the Palaeocene Flyndre accumulation in license PL018C (Noreco 13.34%) is progressing toward a development decision in 2011.

Maersk operates the field, which straddles the Norway/UK median line. Unitization talks continue.

08/11/2011



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