Norwegian Energy Company ASA has reached an agreement with its joint venture partners in Denmark with respect to its forfeited licences and related abandonment liabilities.
Namely, Noreco has terminated its joint venture and its participation in the Nini and Cecile oilfields (the Licences), located in the Danish part of the North Sea. According to provisions in the respective joint operating agreements, Noreco has forfeited and transferred its participating interests in the Licences to the Partners on a pro-rata basis.
DONG E&P A/S is the operator of both licences that contain Nini and Cecile oil fields, licence 4/95 and licence 16/98, respectively, in partnership with RWE Dea AG.
In addition, the settlement for claims on defaulted cash calls and capping of the abandonment liability includes a cash consideration of NOK 60 million ($7.6 million), and an 18.2 per cent working interest in the Lulita field.
The restricted cash set aside for future abandonment liabilities will remain in escrow with and on Noreco’s balance sheet. According to the agreement, Noreco will not be held liable for abandonment costs beyond the restricted cash. Final closing of the agreement is subject to approval by the Danish Energy Agency.
The agreement in Denmark leaves Noreco with full ownership of the significant Siri insurance claim, a 10 per cent working interest in the producing Lulita field, and very limited financial obligations in Denmark.
To remind, Noreco was in breach of the licence agreement that contains Nini field due to not making payments for its share of production costs. This allowed other partners to claim Noreco’s 30 per cent interest in the licence without any consideration. The status of Cecile field licence was similar to this one, Noreco was in breach of the licence agreement, but with a different timing.