The Board and management of Noreco have decided to commence a broad review of its strategic alternatives to enhance shareholder value. The decision reflects a careful consideration of Noreco's current enterprise value as indicated by its stock price relative to its own internal valuation of the asset portfolio. The initiative will examine all possible alternatives, including a sale or merger of the company or sale of assets, in an effort to seek to unlock the potential of Noreco's assets and maximize value to its shareholders.

Third quarter results

Highlights • Gas discovery in Zidane-1 exploration well • Sale of PL378 with Grosbeak discovery for USD 43 million completed • Entered agreement to sell Oselvar and Enoch to Marubeni Corporation for USD 43 million • Huntington development moving towards sanctioning • Average production in third quarter 2010 was 10,225 boe per day • Production from Siri area below plan due to facility issues • Oil price realized at USD 74.4 per boe • Total revenues of NOK 631 million, EBITDA of NOK 327 million and a net result of NOK 167 million

Oil and gas production in the third quarter was 10,225 barrels of oil equivalents (boe) per day, down from 13,125 boe/day in second quarter, mainly due to lower contribution from the Brage and Siri fields. Realised oil price was USD 74.4 per boe.

Total revenues for the quarter were NOK 631 million, compared to revenues of NOK 560 million in the second quarter 2010. Revenues included NOK 199 million in gain from the sale of license PL378 to Talisman.

Production expenses were NOK 145 million, including NOK 38 million related to the permanent repair solution following the Siri shutdown in 2009/10.

Exploration expenses were NOK 90 million, mainly driven by seismic acquisitions to support future exploration drilling. Noreco participated in one successful exploration well in the quarter, the Zidane-1 well in PL435 which proved natural gas, and the related cost of NOK 100 million has been capitalized.

EBIT was NOK 143 million. Net financial items amounted to NOK -126 million. Tax for the quarter was NOK -150 million (gain), of which NOK -50 million (gain) is a reversal of deferred tax related to PL378.

As previously announced, Noreco in September agreed to sell its interests in the Oselvar and Enoch fields to Marubeni Corporation for USD 43 million. The company expects to report a gain on this sale of approximately USD 5 million when the transaction is completed, most likely in Q4 2010. The transaction is not reflected in the Q3 2010 financial statements.

Tags: Norwegian Energy Company ASA