NORWEGIAN ENERGY COMPANY DOWN
Shares in Norwegian Energy Company ASA (NOR. OS) plunged over 70% Wednesday and the oil firms chairman resigned after it warned that it could face problems in meeting its financial commitments.
The company said it is "evaluating mitigating measures that would be required to secure a sustainable financing solution" following the unplanned shutdown of a key pipeline and the write-down of reserves at two North Sea fields.
Output at the Huntington field in the U.K. sector of the North Sea will be hit by restrictions through the Central Area Transmission System (CATS), the pipeline that runs from the central North Sea to a terminal in Teeside, U.K.
BP PLC, which operates CATS, has warned that gas export from Huntington will be restricted from Oct. 1, and there will be no gas export at all from Oct. 18 until the end of the month, ahead of a previously planned shutdown from Nov. 1.
Norwegian Energy also faces potential write-downs from two North Sea oil fields. It could be hit by a write-down of around 700 million Norwegian kroner ($108.6 million) after E. ON SE said it expects significantly lower production from its Huntington oil field compared to Norwegian Energy's current estimates.
DONG Energy has also said it expects lower volumes from its Oselvar field in the Norwegian North Sea due to the poor quality of the reservoir. Norwegian Energy Company is now considering a 50%-75% write-down of its reserves at the field, equal to around 100 million Norwegian kroner.
Chairman Morten Garman and director Erik Henriksen have decided to give notice of their immediate resignation and the board will now decide whether to call a general meeting to consider potential replacements.
At 1023 GMT shares traded 72% lower at NOK2.35.
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