Norwegian Energy Company ASA (“Noreco”) announced its third quarter 2020 results. The third quarter results were strong both financially and operationally. The Company’s financial performance remains resilient, with an adjusted EBITDA of USD 104 million and an operating cash flow of USD 111 million during the quarter.
• Net production of 28.7 thousand barrels of oil equivalents per day ("mboepd")
• Adjusted EBITDA of USD 104 million
• Cash flow from operating activities of USD 111 million
• Realised oil price for the period of 75.3 USD/boe
The operational performance of the Company during the third quarter was stable with net production of 28.7 mboepd which is in the upper range of guidance. The early and proactive approach taken by the DUC operator to mitigate the impact of the pandemic continued to safeguard business continuity. The Tyra Redevelopment project reached an important milestone in September, when first delivery of two new jackets from the yards were safely installed offshore. Future milestones are related to completing topsides fabrications and offshore installations. As a result of the COVID-19 pandemic first gas from Tyra is revised, from 2022 to Q2 2023, while the initial budget remains unchanged.
The financials for the third quarter demonstrate the significant value of Noreco’s hedging arrangements. Price protection, with liquids production fully hedged for 2020, supported revenues of USD 157 million and a realised liquids price of USD 75.3 per barrel, compared to average dated Brent during the same period of USD 42.7 per barrel. Including the contribution from the volume protection arrangements with Shell, the Company generated USD 104 million of adjusted EBITDA during the third quarter and an operational cash flow of USD 111 million.
“For the third consecutive quarter, in a globally challenging year to both our society and the sector, Noreco demonstrates financial and operational robustness. The benefit we are receiving today from our hedging strategy, which was put in place in 2018, reinforces the Company’s commercial acumen and proactive approach to managing risk. We have delivered 2020 Tyra Redevelopment milestones per plan, but the COVID-19 impact in the fabrication yards has led to a revised schedule of Tyra first gas, shifting from 2022 to Q2 2023. With an unchanged budget and a new timeline, we will continue to work towards delivering a state-of-the-art facility that will create further value to our stakeholders”, said David B. Cook, Chief Executive Officer in Noreco.