Norwegian Energy Company ASA (Noreco), provides a production update for the fourth quarter 2009.

Q4 2009 production Noreco's production in fourth quarter 2009 was 5,775 barrels of oil equivalents per day (boed). Net realized oil price was USD 70.5 per barrel, after adjustments for Noreco's oil put options at USD 50 and 75 per barrel, inventory and NGL and gas prices. The production in December 2009 was 4,525 boed. Full year 2009 production was 10,125 boed realized at USD 61 per barrel.

As previously communicated, the Siri area fields were shut down throughout the fourth quarter, and Noreco expects production to restart during January 2010. The development of the Nini East field which will be produced via the Siri platform is now completed, and production is expected to start shortly after the restart of Siri.

The Brage field produced 22,800 boed in December, down 37% compared to November due to a 9 days unplanned production shutdown for facilities repair. The Brage field was back in full production before the end of December. The next infill producer at Brage has been drilled successfully, and is expected to be on stream in Q1 2010.

The South Arne field produced stable rates in December averaging 21,700 barrels per day gross.

The Lulita field is currently shut down awaiting repairs at the Harald platform and is expected to be back on stream in Q1 2010.

The production volumes and prices are preliminary and are subject to adjustments, including final allocations between fields, quality adjustments and prices.

Other Q4 2009 events During the quarter Noreco raised net NOK 1,216 million in new equity by issuing 85,164,829 new shares. The new number of shares is 242,433,766.

The company called and redeemed its bond loans NOR01 and NOR02 in Q4 at a nominal value of NOK 2,240 million, at 103% of par. The book value of these bonds per 30. September 2009 was NOK 2,202 million hence the transactions will result in a NOK 105 mill financial cost which will be charged to earnings in the fourth quarter.

Through the issuance of two new bond loans Noreco raised a nominal amount of NOK 2,000 million. Costs related to these issues amounted to NOK 36 million and will be amortized over the duration of the loans.

As announced on 27 November 2009, Noreco received a total of USD 20.9 million in coverage under its insurance policy related to a pipeline rupture on the Nini field in 2007. The major part of this compensation is related to repair costs which were classified as investments in fixed assets in Noreco's balance sheet, and which will now be reversed.

Noreco currently expects an income in the order of USD 18 million in Q4 2009 from cover under the loss of production income insurance related to the shut down of the Siri area fields. This income is not subject to depreciation under the production-unit-method. The majority of the cost associated with measures to restart production has been capitalized in the balance sheet in anticipation of insurance coverage.

Tags: Norwegian Energy Company ASA