Norse Climbs on Speculation Merger May Boost Funding: Oslo Mover

Norse Energy Corp. ASA, a Norwegian oil and gas explorer struggling to fund its operations, gained for a fifth day in Oslo amid speculation it could seek a merger to strengthen its balance sheet.

The company, based in Lysaker near Oslo, rose as much as 23 percent and traded 12 percent higher at 0.86 kroner as of 1:10 p.m. local time, its longest run of advances in seven months. More than 7.6 million shares have been traded so far today, compared with a three-month average daily of about 880,000.

The rise could be driven by “speculation that it’s nearing an agreement to merge with a partner,” Teodor Sveen Nilsen, an analyst at Swedbank First Securities, said by phone from Oslo. He declined to comment on the identity of a possible partner.

Fram Exploration ASA, a Norwegian oil explorer, is in talks with an unidentified listed group in Norway about a merger, Finansavisen reported on Jan. 4, citing the company. Fram Chairman Bernt Oesthus didn’t answer his mobile phone today when Bloomberg News called seeking comment on the merger.

Shares in Norse Energy, whose U.S. unit filed for voluntary Chapter 11 bankruptcy protection last month, have almost tripled since the start of 2013. The company last year lost almost 90 percent of its market value amid investor concerns that it may be unable to get sufficient funds to boost its balance sheet.

Norse Energy said on Jan. 4 it had failed to pay interest on a convertible callable bond of $21 million, meaning those bonds could be declared in default and due for payment.

Funding Talks

While talks have started with major bondholders and other stakeholders about securing the necessary waivers as well as new funds, there’s a “significant risk” that no agreement will be reached, the company said.

“The company is bankrupt for all practical purposes, at least the operational companies in the U.S.,” said Swedbank’s Sveen Nilsen. “According to our estimates, it has almost no cash left, and it has several claims against it after joint venture wells that it’s not able to pay.”

Swedbank has a reduce recommendation on Norse Energy and a 0.5-krone price estimate on the stock.