OSLO, Norway – Norwegian Energy Co. ASA (Noreco) reports that its UK subsidiary, Noreco Oil UK, has been served a notice of default under the joint operating agreement (JOA) governing the Huntington license in the UK central North Sea.
Post the completed restructuring in April 2015, Noreco retained Stellar Energy Advisors to sell its 20% participating interests in the Huntington license. 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 license on a pro-rata basis at the end of a 45-day period.
Noreco is working with its license partners to determine next steps in relation to its license interest in a consensual manner.
The accounting effect of the expected forfeiture compared to the 2Q report, is an additional loss of an estimated NOK 60 million ($7 million). The total loss for Noreco related to the investment in Huntington will after this amount to approximately NOK 590 million ($69.5 million).
E.ON is the operator of the field, owning a 25%interest in the license. The other partners in the license are Premier (40%), Noreco (20%), and Iona Energy (15%).
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