North Energy Slumps as Dry Well Drains Cash Reserves: Oslo Mover

North Energy ASA (NORTH), a Norwegian oil and gas explorer, slumped to a record in Oslo after its latest dry well and a find deemed not to be commercial increased the likelihood that it may need to raise additional funding.

Shares in the company, based in Alta in northern Norway, dropped as much as 33 percent to 3.20 kroner, the lowest intraday level since selling shares in Oslo in February 2010. That extends the stock’s decline to 54 percent during the last 12 months and gives North Energy a market value of 137.1 million kroner ($24.5 million).

Lotos Exploration and Production Norge AS, which is the operator of license 498, didn’t find hydrocarbons at the Skagen prospect, said North Energy, which owns 25 percent of the license. While Statoil ASA (STL) found gas at Jette in the Norwegian Sea, preliminary calculations suggest the find isn’t commercial, North Energy said. The company owns 15 percent of Jette.

Skagen “was a high potential prospect” for North Energy, Pareto Securities ASA said in an e-mailed note. A find at the prospect could have been worth 6 kroner a share to the company, said the broker, which cut its 12-month price estimate to 6 kroner from 11 kroner while maintaining its buy rating.

“We estimate the company will need to strengthen its balance sheet sometime next year,” Pareto said. “As another prospect came in dry, the risk of an equity issue at a low price has increased.”

North Energy, which has interests in licenses in the Norwegian, North and Barents seas, had cash and cash equivalents of 308 million kroner at the end of the third quarter, the company said on Oct. 31. Shares in the company closed 29 percent weaker at 3.36 kroner in the Norwegian capital.

To contact the reporter on this story: Stephen Treloar in Oslo at streloar1@bloomberg.net

To contact the editor responsible for this story: Jonas Bergman at jbergman@bloomberg.net

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