North E&P to sell 40% working interest in PL 805 to Lundin Norway
North Energy ASA's unit North E&P AS has signed an agreement to sell its 40% working interest in production licence (PL) 805 to Lundin Norway.
The deal is subject to approval from Norwegian authorities.
Following the sale of PL 805, North E&P will have no further licences on the Norwegian Continental Shelf (NCS).
North Energy’s board of directors in a meeting held on Friday decided to discontinue the petroleum activities in its subsidiary North E&P and to seek cash reimbursement of the offshore tax losses.
North Energy’s board of directors chairman Anders Onarheim said: "The business model for small exploration companies has in recent years been challenged by the significant drop in the oil price.
"The activity level on the NCS has come down, and many players have withdrawn from exploration. With no clear signs of improved market fundamentals, the board of North Energy believes that it is now in the best interest of the company's shareholders that North E&P exits its petroleum activities on the NCS."
As of Q1 of 2017, the net cash that North E&P had, including the value of tax losses carried forward, was approximately Nkr245m ($29.3m).
The final amount received through the liquidation of North E&P will be based on closing costs in addition to final assessment of the Norwegian Oil Taxation Office.
Alongside activities being carried out from North E&P, North Energy has several investments outside NCS. These investments in the consolidated accounts were valued to Nkr114m ($13.6m) in the first quarter of this year.
The investments will not be impacted due to the discontinuation of the petroleum activities of North E&P.