Noreco to Proceed with Financial Restructuring, Converting Debt To Equity

Noreco has announced intentions to implement financial restructuring measures with clear signals from Stavanger suggesting the need of looming changes to mitigate the risks stemming from decreasing oil prices, and recurrent delays and incidents. 

On Monday, Chairman of the Borard Erik Henriksen resigned from his position. 

‘The notice will be considered by the Board in due course in accordance with applicable regulations’ the company wrote on its website.  

Noreco did indeed report that its financial position kept worsening, and that an immediate reaction is needed. 

“Noreco’s financial situation and outlook has continued to deteriorate due to the significant and continued drop in oil prices, increases in projected operating costs and accelerated retention of cash to cover future abandonment costs,” Tommy Sundt, CEO of Noreco, commented in a separate note.  

The company requested a temporary suspension of its shares and bonds on the Oslo Stock Exchange, while announcing it will request a deferral of interest payments due on 9 December 2014. 

According to Bloomberg, the company will try to convert about $426 million bond debt into equity. 

The company also announced delays in the E.ON-operated Huntington field. Premier Oil and Iona Energy Canada are the other two partners in the fields. 

In February, Noreco reported a year-on-year 28.8% decrease in total proven and probable oil and gas reserves, “mainly” due to write downs.