OSLO,
Norway, Aug. 3, 2022 /PRNewswire/ -- Norwegian
Energy Company ASA ("Noreco" or the "Company") has today published
an update on the Tyra Redevelopment Project ("Tyra II" or the
"Project") with the first gas date being revised by the operator of
the Danish Underground Consortium (the "DUC), TotalEnergies, to
Winter 2023 / 2024.
The revision has been driven by global supply chain
challenges that have impacted the extent to which fabrication work
on the process module (the "TEG") has been completed in the yard in
Batam. While the sail-away of the TEG will be a positive milestone
that marks the end of Tyra II's onshore fabrication phase, it will
depart with additional work required to be completed offshore in
order to achieve first gas. Additionally, the operator of the
Project has revised its plan for the ongoing hook-up and
commissioning phase ("HUC").
Based on the strength of Noreco's underlying business,
with three producing hubs that are significantly cash generative in
the current environment, the Company is fully funded based on
current estimates and with a capital structure that continues to be
set to deliver Tyra II based on the revised forecasts.
Process Module: TEG
Seven out of eight modules are already installed offshore and the
TEG has been the only remaining module where onshore fabrication is
still ongoing. With load-out of the process module beginning
this week, the module will leave McDermott's yard in Batam in an
incomplete state with approximately 580,000 hours of remaining
work, where the operator expects approximately 165,000 hours are
required to reach first gas. The Carry-Over work is mainly caused
by the overall performance at the yard where overhang from COVID-19
has challenged the quality and progress, and the operator's efforts
in mitigating actions have proved not to be sufficiently effective.
The sail away of the module remains on schedule and is expected in
early September where the TEG will be transported directly to the
Tyra field by heavy lift vessel GPO Emerald followed by a lift and
installation by Heerema's Sleipinir.
Offshore Hook-Up and Commissioning
Although TotalEnergies has focused on optimising the ongoing
offshore activities at the Tyra field, progress is below the
original plan and will be further impacted by the carry-over scope
of the arriving TEG. As such, offshore productivity assumptions
have been revisited with several identified areas of potential
improvements and learnings which should have an overall positive
effect on the Offshore Hook-Up and Commissioning performance going
forward.
Revised Start-Up of Tyra II
The final stage of the yard fabrication is now complete with seven
out of eight modules in place. As a result, TotalEnergies has
revised the planning towards first gas according to the status of
TEG at sail away. The operator has concluded that time
schedule of the original planned work scope is no longer achievable
and the probabilistic range of first gas dates for Tyra II is as
follows:
- P10: October 2023
- P50: December 2023
- P90: March 2024
Budget
As a result of the schedule change, the expenditure budget for Tyra
II is expected to rise. While the operator is in the process
of preparing a formal budget for approval by the DUC partnership,
TotalEnergies have indicated that they expect a gross budget to
first gas of c. DKK 24.0 billion and
to Project completion of DKK 25.7
billion. Net to Noreco, the remaining expenditure to
reach first gas is approximately USD 300
million which implies a net increase to first gas of
approximately USD 120 million
compared to previous budget. The increase in budget is mainly
related to higher expected costs on the hook-up & commissioning
and project management.
Noreco's Robust Underlying Business Model
The Company has in H1 2022 delivered strong results and is in a
robust financial position. The cash generation from Dan, Gorm and
Halfdan is significant and during Q2 2022 the Company delivered
revenues of USD 265 million and
EBITDA of USD 167 million. This is
mainly a result of high operational performance of all the three
hubs and a favourable commodity price environment. Noreco remains
fully funded to deliver Tyra based on current estimates, with
significant headroom under the financial covenants of the Company's
debt instruments. With the remaining work of the Tyra Redevelopment
Project being carried out locally at the Tyra field in Denmark by the operator, Noreco expects a
higher transparency of the Project's performance and intends to
update the market on a regular basis on relevant progress and
milestones.
Marianne Eide, Noreco's Chief
Operating Officer commented:
"Today's news on a revised scheduled for Tyra is disappointing,
however we are now entering the last stage of the Tyra
Re-development with a good definition of the work scope remaining
to achieve first gas. We now have a robust plan built on experience
from the initial nine months of offshore hook-up and commissioning
and we expect to add more than 500 offshore workers. The complexity
of the operations at Tyra will increase and safe operations is our
main priority.
The imminent sail-away of the TEG module from Batam is a
significant milestone for Tyra II with the onshore fabrication
process complete. By Q4 2022, all eight modules will have
been installed offshore and, importantly, remaining activity to
first gas will be fully within the direct control of TotalEnergies.
In parallel with delivering Tyra we are working to increase gas
production from our producing assets in the DUC. We have seen
positive gains from the Halfdan stimulation campaign and for the
upcoming infill wells we are prioritising gas rich
targets"
Euan Shirlaw, Chief Executive
Officer of Noreco said:
"Noreco fully recognises economic, strategic and political
importance of achieving Tyra first gas. Our focus will remain
on ensuring that the revised project plan, as recently communicated
to us by the operator, is secured; we are committed to making an
active contribution as we seek to improve offshore HUC performance
and expedite first gas from Tyra II.
Our underlying business with the producing Halfdan, Dan and Gorm
hubs continues to perform strongly and the extent to which this
translates into the generation of meaningful profitability and
cashflow was demonstrated in our Q2 2022 results. Against the
current market backdrop, we are actively pursuing short-cycle
investment opportunities that will enable us to produce more in the
near-term. The combination of strong recent results and a
positive outlook ensures we remain fully funded despite the
expected cost increase for the Project. Our stable and robust
capital structure continues to be set to take whatever actions are
available to achieve the earliest start-up for Tyra
II"
Investor Call
The Company will host an investor call today at 11am CEST. Presentation materials for the
investor call will be made available shortly ahead of the call at
Noreco's website:
https://www.noreco.com/reports-and-presentations.
To join the investor call:
https://channel.royalcast.com/hegnarmedia/#!/hegnarmedia/20220803_1
IMPORTANT NOTICE
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.
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 of the Norwegian Securities
Trading Act. The stock exchange announcement was published by
Cathrine Torgersen, Executive Vice
President Investor Relations & ESG, Norwegian Energy Company
ASA, at the date and time as set out above.
Contact:
Cathrine Torgersen, EVP Investor
Relations & ESG
Phone: +47 915 28 501
Email: ct@noreco.com
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.
This information was brought to you by Cision
http://news.cision.com
https://news.cision.com/noreco/r/noreco--update-on-the-tyra-redevelopment-project,c3609648