When damage to the Siri platform in the Danish North Sea put Noreco at a crisis point, its turnaround plan included the opportunity to acquire new Danish assets from oil major Shell. But how could the company raise the financing? Clarissa Dann reports on how a seven-year reserve-based lending solution positioned this remarkable Norwegian oil producer for growth in a two-year journey of revival
In the flow article, ‘Sunset to sunrise’, we saw how reserve-based lending (RBL) helps smaller independent oil producers grow their businesses through to investment grade status and the very different approaches taken by the UK and Norway took to oil sector governance in the North Sea Basin.
In addition, the article explained how oil majors are now investing elsewhere and giant European utility companies retrenching from hydrocarbon extraction. This has stimulated a growing appetite from a new breed of agile, independent oil E&P entities acquiring competitive assets, and eagerness to reach once-inaccessible or undiscovered reserves.
An example of how this secured borrowing base structure where funds are lent against the future cash flows of the business can now also be seen in the phoenix-like rise of Norwegian Energy Company ASA (Noreco) as it prepares to make a transformational acquisition from Shell of their upstream assets on the Danish Continental Shelf (DCS).