Norwegian oil company North Energy on Wednesday reported a net profit for the first quarter of the year, as opposed to a net loss in the same period last year, driven by the acquisition of Explora Petroleum.
North Energy posted a net profit of NOK 94.1 million for the first quarter of 2016, compared to a loss of NOK 35.6 million in the first quarter last year. In its 1Q 2016 report, the company explained that the improved result was mainly driven by the gain reported on the acquisition of the company North E&P (former Explora Petroleum). Excluding this gain, North Energy had a net loss of NOK 6.7 million.
To remind, North Energy bought Explora Petroleum, an exploration and production company also from Norway, for a cash payment of $2.5 million in December 2015. Following the acquisition, North Energy consolidated its petroleum operations in a single company through transferring its petroleum operations from North Energy to Explora, thereby bringing employees together in a new organisation for the combined company and renaming Explora into North E&P.
According to the company’s report, a NOK 100.8 million gain from the acquisition of Explora Petroleum contributed to its best quarterly results in its nine-year history.
“We have cut our operating expenses significantly, and we have limited investment commitments ahead of us. This means that we have more financial flexibility to explore further growth opportunities,” says Knut Sæberg, CEO of North Energy.
“Developments in the oil market have affected the outlook for exploration activities, which has become more challenging in light of a lower oil price regime. As a response to this, North Energy in February decided to broaden the company’s business scope to include activities also within development and production of oil and gas resources and other forms of energy.”
During the quarter, North Energy’s total exploration costs amounted to NOK 6 million, compared to NOK 117.1 million in the corresponding quarter 2015.
The company said that the first quarter of 2015 was impacted by drilling costs on the Tvillingen South and Haribo prospects, while there were no drilling expenses in the first quarter of 2016.
North Energy does not expect to participate in drilling activities in 2016, the company stated.
Offshore Energy Today Staff