Norwegian Energy Company ASA Announces Trading and Operations Update in connection with Request for Dialogue with Bondholders

OSLO, Norway, June 28, 2021 /PRNewswire/ — Norwegian Energy Company ASA (“Noreco” or the “Company”) has today announced a trading and operations update to the market for the two months ending 31 May 2021. A Capital Markets Update is attached and will be made available on the Company’s website, www.noreco.com. In addition, the Company will seek to engage in bondholder discussions regarding the addition of further covenant headroom under its NOR14 Senior Unsecured Bond agreement.

The Company’s second quarter financial statements will, as planned, be released to the market on 13 July 2021. The Company has not completed its second quarter 2021 financial reporting. The estimates provided in this release are therefore subject to change and the second quarter financials may deviate from the information provided herein.

Financial 

• Strong liquidity position of USD 272 million at 31 May 2021, consisting of undrawn RBL capacity of USD 178 million based on the Company’s current Borrowing Base and cash on balance sheet of USD 94 million

• Successful closing of new USD 1.1 billion RBL facility with existing and new lenders.  This new facility, which has a seven-year term and amortizations from the second half of 2024, replaced the Company’s prior USD 900 million facility. This provides additional liquidity while also loosening the pre-Tyra leverage covenant and is a strong testimony to Noreco’s underlying assets and business. The semi-annual redetermination of the RBL Borrowing Base is currently ongoing and is expected to be announced end of June 2021, with the Company anticipating the facility’s cash drawing capacity to remain above USD 1 billion

• Due to favorable gas market conditions and to further safeguard pre-Tyra cash flow, during Q2 2021 to date the Company entered into additional price hedging agreements of 1.2mm MWh at EUR 29/MWh for Winter 2021 / 2022

The information provided above includes certain alternative performance measures (“APMs”).  These APMs are consistent with those used in the Company’s annual and quarterly financial statements and reference is made to the Company’s first quarter 2021 financial statements.

Operational 

• Net production of approximately 27.3 mboepd during the first two months of the second quarter, in the upper range of the Company’s annual guidance of 25.5 – 27.5 mboepd

• Operational efficiency of 83.5 percent during second quarter

• The Noble Sam Turner rig program for planned well workovers and well maintenance continues to have a positive impact on operating performance Tyra Redevelopment 

• High activity levels ongoing during 2021 are progressing the project significantly towards first gas

• Fabrication of the two wellhead and riser platforms (WHRP) and the processing and accommodation modules takes place on three yards

• • Sembcorp Marine (Singapore): WHRP for Tyra East and Tyra West. Fabrication of the Tyra East WHRP is close to complete and the transport vessel arrived at the yard 20 June. The Tyra West WHRP is progressing towards sail away and installation during 2022. The temporary shutdown of the yard in May this year due to COVID-19 only had a limited impact on the Tyra project. As such the current progress at Sembcorp is not expected to create a risk to the first gas date

• • McDermott (Batam, Indonesia): Processing module. Due to high frequency of COVID-19 cases in the area, enhanced precautionary measures have been implemented to minimize exposure and new cases. As a result, parts of the fabrication of the process module have progressed slower than expected. However, built-in contingency still allows the process module to sail away during 2022

• • Rosetti Marine (Ravenna, Italy): Accommodation module. Due to COVID-19 impacts, fabrication is progressing slower than originally planned. Several strategic alternatives related to sail-away timing are currently being assessed, with no scenarios under current estimates that are expected to create a risk to first gas date

• Tyra budget: The official budget of gross DKK 21 billion has not been revised since FID in 2017. However, and mainly driven by COVID-19, the Company is seeing upward pressure on costs. While the Danish Underground Consortium partnership (the “DUC”) has not yet revised the official Tyra budget, Noreco as a non-operated partner internally assumes an estimated project cost of DKK 22 billion based on the Company’s independent assessment of information provided by the operator

• While the global COVID-19 pandemic continues to be a challenge, including at fabrication yards, Noreco expects the ongoing proactive mitigation and preparedness strategies being exercised will safeguard the Tyra first gas date in Q2 2023 NOR14 Covenant Headroom Noreco has significantly strengthened its capital structure during 2021 through the refinancing of its RBL facility, providing additional liquidity and deferring amortization payments into the second half of 2024.    Using current forecasts, the Company does not expect to breach NOR14’s maximum leverage ratio during the Tyra Redevelopment period based on forward curve pricing assumptions.  However, Noreco would like to add additional headroom under this financial covenant to reduce exposure to future market volatility and further secure delivery of Tyra. The Company believes refocusing the covenants on liquidity enhances the NOR14 bondholders’ position as this measure more closely corresponds to the core of Noreco’s underlying credit story in the period prior to Tyra recommencing production.  It will also better reflect the revised RBL facility, where the pre-Tyra leverage covenant was relaxed with no impact on margin.  Additionally, Noreco intends to address the leverage covenant impact of the shift in Tyra first gas to Q2 2023 that was announced in November 2020.    The Company is seeking to engage in a dialogue with bondholders and has appointed Arctic Securities and Pareto Securities to assist with this process.   ***   Contact:  Euan Shirlaw, Chief Financial Officer Phone: +44 7979 690622 Email: [email protected]  Cathrine Torgersen, EVP Investor Relations & Communications Phone: +47 91 52 85 01 Email: [email protected] 

About Norwegian Energy Company ASA 

Noreco is a publicly owned company with focus on the oil, gas and offshore industry. The Company’s shares are listed on the Oslo Stock Exchange (ticker NOR). For further information, please visit: www.noreco.com.

IMPORTANT NOTICE

This announcement is not and does not form a part of any offer to sell, or a solicitation of an offer to purchase, any securities of Norwegian Energy Company ASA. The distribution of this announcement and other information may be restricted by law in certain jurisdictions. Copies of this announcement are not being made and may not be distributed or sent into any jurisdiction in which such distribution would be unlawful or would require registration or other measures. Persons into whose possession this announcement or such other information should come are required to inform themselves about and to observe any such restrictions.

FORWARD LOOKING STATEMENTS. Matters discussed in this announcement include forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as “believe,” “expect,”, “plans”, “anticipate,” “intends,” “estimate,” “will,” “may,” “continue,” “should” and similar expressions. Forward-looking statements include statements regarding: objectives, goals, strategies, outlook and growth prospects; future plans, events or performance and potential for future growth; liquidity, capital resources and capital expenditures; economic outlook and industry trends; commodity prices and developments in the Company’s markets. The forward-looking statements in this announcement are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in the Company’s records and other data available from third parties. Although the Company believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control. Such risks, uncertainties, contingencies and other important factors could cause the actual results of the Company or the industry to differ materially from those results expressed or implied in this announcement by such forward-looking statements. No representation is made that any of these forward-looking statements will come to pass or that any forecast result will be achieved and you are cautioned not to place any undue influence on any forward-looking statement.

The information, opinions and forward-looking statements contained in this announcement speak only as at its date and are subject to change without notice. The Company does not undertake any obligation to review, update, confirm, or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this announcement.

No representation is made as to the accuracy or completeness of this announcement and none of them accepts any responsibility for the contents of this announcement or any matters referred to herein.

This announcement is for information purposes only and is not to be relied upon in substitution for the exercise of independent judgment. It is not intended as investment advice and under no circumstances is it to be used or considered as an offer to sell, or a solicitation of an offer to buy any securities or a recommendation to buy or sell any securities in the Company. No liability arising from the use of this announcement is accepted.

This information is considered to be inside information pursuant to the EU Market Abuse Regulation, and is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act.

This stock exchange announcement was published by the contact persons above in Norwegian Energy Company ASA on 28 June 2021 at 16:30 (CEST).

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