North Energy recorded a comprehensive loss of NOK 20.8 million in the second quarter of 2021 compared to a comprehensive income of NOK 52.0 million in the same quarter last year. The loss reported this quarter is mostly driven by a decrease in the market value of the investment in Touchstone Exploration.

In April, the General Assembly of North Energy approved a dividend of NOK 0.45 per share, in total NOK 52.8 million. The dividend was paid to shareholders later in April. The Company’s cash position as per end of second quarter 2021 is reported at NOK 57.6 million.

The Company’s main industrial investment, Reach Subsea, reported a comprehensive income of NOK 15.9 million in the second quarter of 2021. North Energy consolidates NOK 5.1 million of the result in its financial figures. In addition, North Energy received dividend of NOK 6.9 million from the associated company.

During the quarter, Touchstone Exploration released an operational update with results from a pressure buildup test on Cascadura Deep. The results were in-line with expectations and confirmed the significant potential of the Cascadura structure. Furthermore, the company aims to bring the Coho-1 discovery onto production towards the end of the year. The two Cascadura wells are expected to come into production in the first half of 2022. Touchstone Exploration started in August 2021 the drilling of the Royston well, the largest structure on the Ortoire block.

At the end of the second quarter 2021, North Energy’s total investment portfolio had a market value NOK 287.0 million, down from NOK 304.0 million last quarter. The portfolio consists of industrial holdings, listed financial investments and other financial investments. The industrial holdings include the Company’s shares in Reach Subsea where North Energy is the major shareholder. In April, North Energy, together with Ferd AS, invested additional NOK 10 million each in Wind Catching Systems AS which is developing an innovative technology for floating offshore wind systems. The listed financial investments consist of shares in Touchstone Exploration amongst others.

Highlights

During the first half year of 2020, the global economy was significantly impacted by the Covid-19 pandemic and the dramatic drop in oil prices. However, financial markets recovered rapidly during the second half year with market values coming back to levels seen before the pandemic.

In accordance with the new dividend policy announced in the second quarter 2020, the General Assembly of North Energy approved in April 2021 the proposal from the Board of North Energy to distribute a dividend of NOK 0.45 per share to shareholders. The dividend, in total NOK 52.8 million, was paid to shareholders in April and classified as a redemption of paid-in capital.

In January 2021 Reach announced a new innovative subsea service solution, Reach Remote, that will significantly reduce cost and virtually eliminate carbon footprint when brought to market in 2022.

In June 2021 the General Assembly of Reach Subsea approved the proposal from the Board of Directors to distribute a dividend of NOK 0.15 per share. The dividend was paid to shareholders later in June, whereof North Energy, based on its ownership, received NOK 6.9 million.

Touchstone Exploration expects production from the Ortoire block to increase cash flow significantly and contribute to a substantial reduction in volatility of future earnings. Based on the natural gas sales agreement with the National Gas Company of Trinidad and Tobago, Touchstone has secured offtake for all natural gas produced from the Ortoire license.

In first quarter 2021, North Energy together with Ferd AS exercised an option to invest an additional NOK 10 million each through a subscription of new shares. The capital was paid in April and North Energy and Ferd AS now each hold approximately 31% of Wind Catching Systems AS.

North Energy’s investment portfolio has at the end of June 2021 a market value of NOK 245.7 million. The Company’s main investments are a 32.1 per cent ownership in Reach Subsea with a market value of NOK 142.5 million and a 5.9 per cent ownership in Touchstone Exploration with a market value of NOK 116.3 million at the end of June 2020.

Touchstone Exploration

The Company’s key financial investment is in Touchstone Exploration with an ownership interest of 5.9 per cent by the end of the second quarter.

During the quarter, the company released an operational update with results from a pressure buildup test on Cascadura Deep. The results were in-line with expectations and confirmed the significant potential of the Cascadura structure. In addition, the company also detailed that Cascadura production facilities will have an initial capacity of 90 MMcf/d (expandable to 200 MMcf/d).

In 2021 the company plans to drill the Royston well located further east in the Ortoire block. Furthermore, the company aims to bring the Coho-1 discovery onto production towards the end of 2021.

Coho-1 was the first well drilled in the 5-well programme on the Ortoire Block. The company estimates the net future production rate from Coho-1 to be in the range from 1,300 – 1,600 barrels of oil equivalent (boe) per day, which will double the company’s overall production.

The two Cascadura wells are targeted for production in the first half of 2022. The company estimates the net future production rate from Cascadura to be in the range of 10,000 – 13,000 boe per day, which is almost ten times the company’s current production.

Touchstone expects production from the Ortoire block to increase cash flow significantly and contribute to a substantial reduction in volatility of future earnings. Based on the natural gas sales agreement with the National Gas Company of Trinidad and Tobago, Touchstone has secured offtake for all natural gas produced from the Ortoire license.

Furthermore, Touchstone reported in June 2021 the execution of a ten-year lease operatorship agreement (LOA) with Heritage Petroleum Company Limited for the CO-1, CO-2, WD-4 and WD-8 blocks. In conjunction with the execution of the LOA, the Board of Touchstone has approved the drilling of one well on each Block in the second half of 2021.