Presentation

Noreco is an E&P company, established in 2005 focusing on reservoirs offshore Norway, before expanding into Denmark and the UK through strategic acquisitions. It divested its Norwegian assets in 2016 and in late 2018, the company acquired Shell’s 36.8% stake in the Danish Underground Consortium (DUC). The transaction transformed Noreco into the second largest producer in Denmark with a production of ~28,000 boepd in Q2’20 and 209 mill boe of 2P reserves. Noreco is listed on the Oslo Stock Exchange.

The DUC consists of 15 fields spread across four hubs, all operated by Total, which last year acquired Chevron’s stake in the consortium. The DUC is the most important asset on the Danish Continental Shelf delivering almost 90% of the country’s oil and gas production. The partnership also owns key infrastructure, including pipelines and terminals on Harald, Tyra and Gorm, transporting oil and gas to the mainland. The two most important fields are Halfdan and Tyra, which combined hold ~70% of the of the 2P reserves.

Tyra is currently in a redevelopment phase including a full modernisation of the facilities to extend the life of the field and increase future production, with expected production of 60,000 bpd. The redevelopment project remains on track and is expected to be completed in 2022. A successful completion will increase Noreco's total production to >40,000 bpd and lift the estimated NAV to above NOK 400/share.

Noreco has oil price hedges in place for 2020-22, providing good visibility on near-term cash flows and stability through the volatile price environment experienced so far in 2020. Despite investments at Tyra, the company is more or less cash flow neutral at Brent USD 50-55/bbl and will see strong cash flow generation once Tyra is back on-stream.