CEO says “best is yet to come” for Norse Energy
OSLO, NORWAY – Despite posting a net loss for 2010, Norse Energy officials expressed optimism last week about the future of the company’s position in Central New York’s budding natural gas industry.
“We really believe at Norse Energy, the best is yet to come,” CEO Mark Dice said last Tuesday, during a presentation to investors in Oslo, Norway.
The company is currently focusing on development of its Herkimer assets in the 130,000 acres it has under lease in the region, while it waits for New York State to finalize regulations regarding large volume hydro-fracking, which will be required to develop its more bountiful shale resources, which include the Marcellus and Utica plays.
In his fourth quarter and year end financial update, CFO Richard Boughrum reported a $57,249,000 net loss for 2010.
“It’s good to be drilling again,” he said.
But the path forward for the company will also include restructuring, Boughrum told investors, including the sale or monetization of non-core assets.
The CFO reported that the company expects to close within the next 60 days on the sale of Norse Pipeline and Mid American Natural Resources to Appalachian Transportation & Marketing LLC., headed by former Norse Energy CEO Oivind Risberg. The $20.7 million deal, which is contingent on approval from the New York State Public Service Commission, will yield $15 million in cash for Norse and reduce its debt by $4 million.
The company is also pursuing joint venture opportunities. Two were signed during the fourth quarter of 2010: one with Stryker Energy for the development of 3 wells and the other and 18-well agreement with Bradford Energy. According to Boughrum, the deals brought in over $10 million.
The company is also in the process of selling $2 million worth of farm acreage it purchased outright to obtain the mineral rights. It will retain those rights after the sales, half of which have already closed with the remainder under contract.
According to Dice, Norse is “actively marketing” its pipeline right-of-way - which he pointed out connects three interstate transmission lines - and gathering line system.
“We expect to bring in a partner to put the pipeline in the ground,” he explained. They will need the additional capacity to get the gas to market, both from their existing Herkimer wells, and the 30 wells they intend to drill in 2011.
Since the company resumed drilling in October using 3D seismic data, five wells have been drilled in the northern section of its lease-holdings. All have had promising “flares,” indicating a large flow of gas, the CEO said.
According to Dice, they will take a break from drilling during March and April out of deference to “Frost Laws.”
“This is when you can do significant damage to the roads if you move your equipment,” he explained, adding that this is not a requirement but something they are doing voluntarily. The CEO said the break will allow them to apply the knowledge they’ve gained during the drilling of these last wells to future exploration. Cost control and increased production efficiency will also be a focus, according to Boughrum.
“This is the pathway to creating a sustainable positive cash flow for the company,” he said.
Dice also spoke to the future value of the company’s Marcellus shale lease-holdings. He cited the presence of industry leaders like Chesapeake, Talisman, Williams and Exxon Mobile XTO as an indication of the desirability of the play.
“It’s quite an important list of investors, and Norse Energy is right in the middle of the pack, right in the center of the fairway,” he said.
And Norse could begin tapping into this vast resource before the end of the year.
“We expect to see the next draft of environmental regulations (SGEIS) delivered to the public for comment on or about June 1,” Dice said, with final regulations in place later this year. It has invoked the force majeure clause in its leases to ensure it doesn’t lose any of its holding until those regulations are released. Others it is seeking to hold by production, by drilling into the Herkimer.
“We want to be positioned to rapidly develop that acreage as soon as we are given the right to use large volume hydraulic fracturing,” Dice said.
He referred to monetizing the company’s shale resources as “the ultimate prize,” and the key to “unlocking the true potential” of Norse Energy.
“We really believe at Norse Energy, the best is yet to come,” CEO Mark Dice said last Tuesday, during a presentation to investors in Oslo, Norway.
The company is currently focusing on development of its Herkimer assets in the 130,000 acres it has under lease in the region, while it waits for New York State to finalize regulations regarding large volume hydro-fracking, which will be required to develop its more bountiful shale resources, which include the Marcellus and Utica plays.
In his fourth quarter and year end financial update, CFO Richard Boughrum reported a $57,249,000 net loss for 2010.
“It’s good to be drilling again,” he said.
But the path forward for the company will also include restructuring, Boughrum told investors, including the sale or monetization of non-core assets.
The CFO reported that the company expects to close within the next 60 days on the sale of Norse Pipeline and Mid American Natural Resources to Appalachian Transportation & Marketing LLC., headed by former Norse Energy CEO Oivind Risberg. The $20.7 million deal, which is contingent on approval from the New York State Public Service Commission, will yield $15 million in cash for Norse and reduce its debt by $4 million.
The company is also pursuing joint venture opportunities. Two were signed during the fourth quarter of 2010: one with Stryker Energy for the development of 3 wells and the other and 18-well agreement with Bradford Energy. According to Boughrum, the deals brought in over $10 million.
The company is also in the process of selling $2 million worth of farm acreage it purchased outright to obtain the mineral rights. It will retain those rights after the sales, half of which have already closed with the remainder under contract.
According to Dice, Norse is “actively marketing” its pipeline right-of-way - which he pointed out connects three interstate transmission lines - and gathering line system.
“We expect to bring in a partner to put the pipeline in the ground,” he explained. They will need the additional capacity to get the gas to market, both from their existing Herkimer wells, and the 30 wells they intend to drill in 2011.
Since the company resumed drilling in October using 3D seismic data, five wells have been drilled in the northern section of its lease-holdings. All have had promising “flares,” indicating a large flow of gas, the CEO said.
According to Dice, they will take a break from drilling during March and April out of deference to “Frost Laws.”
“This is when you can do significant damage to the roads if you move your equipment,” he explained, adding that this is not a requirement but something they are doing voluntarily. The CEO said the break will allow them to apply the knowledge they’ve gained during the drilling of these last wells to future exploration. Cost control and increased production efficiency will also be a focus, according to Boughrum.
“This is the pathway to creating a sustainable positive cash flow for the company,” he said.
Dice also spoke to the future value of the company’s Marcellus shale lease-holdings. He cited the presence of industry leaders like Chesapeake, Talisman, Williams and Exxon Mobile XTO as an indication of the desirability of the play.
“It’s quite an important list of investors, and Norse Energy is right in the middle of the pack, right in the center of the fairway,” he said.
And Norse could begin tapping into this vast resource before the end of the year.
“We expect to see the next draft of environmental regulations (SGEIS) delivered to the public for comment on or about June 1,” Dice said, with final regulations in place later this year. It has invoked the force majeure clause in its leases to ensure it doesn’t lose any of its holding until those regulations are released. Others it is seeking to hold by production, by drilling into the Herkimer.
“We want to be positioned to rapidly develop that acreage as soon as we are given the right to use large volume hydraulic fracturing,” Dice said.
He referred to monetizing the company’s shale resources as “the ultimate prize,” and the key to “unlocking the true potential” of Norse Energy.
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