2012-09-28 10:04:05 -

Stavanger, 28 September 2012: In conjunction with certain proposed refinancing
measures as announced today, Norwegian Energy Company ASA ("Noreco" or the
"Company") hereby releases the following trading update, containing further
information on the previously indicated company reorganization, including the
tax refund resulting therefrom, as well as information on certain ongoing
discussions with the NFSA concerning its 2011 financial statements and a general
trading update on other items as set out below.

Reorganisation of Group Structure

As previously communicated, Noreco is planning to reorganise the legal structure
of the group which will provide for more efficient operations.

Noreco is today both a holding company for a large number of entities in several
jurisdictions, and an operating company for a significant part of the group's
activities in Norway. The current group structure is a   result of several
acquisitions and disposals, and has over time proved to be suboptimal. The
Company is therefore, as indicated in the second quarter report, preparing a
reorganisation to achieve a more appropriate group structure.

The key objectives of this reorganisation are to transform Noreco to a pure
holding company, with all operational activities being continued in wholly owned
subsidiaries, and thereafter seek to reduce the number of subsidiaries and over
time targeting single operating entities for each jurisdiction. Such
reorganisation will provide for a more appropriate structure, and be favourable
both from risk management, financial, flow of funds and fiscal perspectives, and
position Noreco for continued growth of its core business.

The Noreco group's activities, plans and strategy will remain unaffected by the
reorganisation. The organisational structure will be unchanged, and the
reorganisation will not have any negative consequences for the employees.

The planned reorganisation will lead to the parent company, Norwegian Energy
Company ASA, discontinuing its direct petroleum activities liable for special
tax within the meaning of the Norwegian Petroleum Taxation Act. As a
consequence, Noreco may claim payment from the Norwegian government of the tax
value of its uncovered losses pursuant to the Norwegian Petroleum Taxation Act
section 3(c)(4). As at 31 December 2011, this tax value amounted to NOK 569
million. This amount will increase with the tax value of losses in 2012,
resulting in an expected tax value in the range of NOK 650 million to NOK 700
million. The tax refund will be payable at the end of the year following the
year of discontinuance of petroleum activity in the parent company. The right to
such refund has been confirmed by an advance tax ruling from the Norwegian
Petroleum Taxation Board (Oljeskattenemnda).

The first step in this respect will be the transfer of the remaining license
participation rights on the Norwegian continental shelf currently held by Noreco
itself to its 100% (indirect) owned subsidiary Noreco Norway AS (formerly
Altinex Oil Norway AS). This transfer will in addition to such licenses include
all related assets, contracts and personnel, and is, subject to relevant
conditions being fulfilled, contemplated to be done with an effective date of
31 December 2012. Following completion of the transfer, Noreco Norway AS will
become the owner of all the group's licenses on the Norwegian Continental Shelf.
The book value of the licenses being transferred is NOK 141 million as of the
end of the second quarter 2012, and the transfer will be carried out at arm's
length basis.

Noreco expects that the parent company's direct petroleum activities will be
discontinued by the end of 2012, subject to receipt of certain third party
approvals inter alia from Norwegian authorities.

 Discussions with the Norwegian FSA on the 2011 annual financial statements

The Norwegian Financial Supervisory Authority (the "NFSA") has as part of its
supervision of listed companies initiated a review of Noreco's annual financial
statements for 2011. The NFSA has raised certain specific issues with respect to
the 2011 financial statements, issues which are currently subject to on-going
discussions with the Company.

The NFSA has asked for information about several items, however, the key issues
so far being discussed are related to the goodwill arising from the acquisition
of Altinex in 2007 and the allocation of such goodwill to the assets disposed of
by Noreco in 2011, as well as the booking of suspended wells. The amount of
contested goodwill allocation is not clear, but could have an estimated impact
on book equity in the range of NOK 30 to 200 million. The potential effect on
the accounts of any reassessment of suspended wells is difficult to estimate at
this stage. None of the issues being discussed with the NSFA will, however, have
any cash effects.

The annual financial statements for 2011 were audited and an unqualified audit
opinion was issued by the Company's independent auditor, and the NFSA's review
has not uncovered any significant matters not previously considered by the
Company and its auditor.

Noreco is of the opinion that prudent and acceptable accounting standards in
compliance with IFRS have been used, but as IFRS in several areas are
judgemental, the discussion with the NFSA may nevertheless result in the Company
reassessing the book value of its goodwill, licenses and capitalised exploration
expenses going forward, and possibly corresponding amendments to its comparative
historical accounts. The issues being discussed have no cash effects, but
certain covenants in Noreco's bond loans may be impacted by write-downs of
equity. Therefore, in order to create a stable financial outlook and in light of
the contemplated financing efforts announced today, Noreco will propose to
obtain consent to an allowance from bondholders in the event that such write-
downs should occur. The proposed allowance will entail adjusting for any
potential write-downs related to goodwill and suspended wells limited upwards to
NOK 600 million (after tax) which is then included in the calculation of the
book equity ratio by adding the actual write-down amount to the calculation of
equity and total assets. Noreco is confident that the proposed allowance in the
ratio calculation, in addition to the new equity from the equity issue of up to
NOK 400 million proposed today, will be sufficient to stay within the covenant
limit.

General trading update

Exploration drilling

Noreco is currently involved in two active exploration wells, Albert in Norway
and Romeo in the UK. At Albert, drilling was resumed late August after being
temporarily suspended due to rig maintenance. Drilling is still underway and the
results so far remain inconclusive. The results will be announced when drilling
and data gathering has been concluded.

The Romeo well in the UK was recently spudded, and results may be expected in
the fourth quarter. Drilling on the Jette and Snurrevad prospects in Norway is
expected to commence in October.

Production growth

Noreco expects a significant production growth in 2012, driven by start-up of
the Oselvar and Huntington fields in the North Sea. Huntington is expected to
start producing during the fourth quarter 2012 in line with previous guidance.
At plateau, the production from Huntington is expected to be around 6,000
barrels of oil equivalents per day (boed) to Noreco. The upgrade of the FPSO
Voyageur Spirit is in the final stages, and the unit is scheduled to sail from
the Nymo shipyard to the field on 30 September 2012 subject to weather
conditions.

Oselvar commenced production in April. Since start-up, the field has produced
below expectations. The operator is still gathering data and performing analysis
in order to clarify the reason for, and to identify possible corrective measures
for the underperformance. Oselvar is currently shut down due to a shutdown of
the host platform Ula following an incident that took place 12 September 2012.
Noreco anticipates that production will resume within one week.

Other

Noreco is actively pursuing the insurance claim relating to the damage to the
Siri platform which was discovered in 2009. The Company remains of the firm
opinion that the damage is covered by insurance, and will continue to actively
pursue the claim until a successful outcome has been achieved. The exact timing
of this process is however difficult to predict.

In December 2011 Noreco completed the sale of its interest in license PL435,
containing the gas discovery Zidane-1, to OMV (Norge) AS for a consideration of
NOK 180 million. Noreco is also under certain conditions entitled to an
additional consideration for discoveries made in the Zidane-2 exploration well,
which was completed as a gas discovery in the second quarter of 2012. According
to the Norwegian Petroleum Directorate, preliminary estimates place the size of
the discovery between 4 and 13 billion standard cubic metres (Sm3) of
recoverable gas. This range corresponds to a payment to Noreco in the range from
zero to approximately NOK 175 million, which is due upon approval of a
development plan for the field.

Noreco today announced a contemplated private placement of new equity up to NOK
400 million, combined with a new senior unsecured bond issue of NOK 300 million
to repay its outstanding bond NOR03 and a proposed process of obtaining certain
waivers of financial covenants with respect to gearing ratios and booked equity
from the holders of NOR04, NOR05 and NOR06/07. See separate announcements for
further details.


Contacts:
Einar Gjelsvik, CEO (+47 992 83 856)
Kjetil Bakken, VP Investor Relations (+47 91 889 889)

* * * * *

Certain statements contained herein that are not statements of historical fact,
may constitute forward-looking statements. Forward-looking statements involve
known and unknown risks, uncertainties and other factors that could cause the
actual results or events concerning the Company to be materially different from
the historical results or from any future results expressed or implied by such
forward-looking statements. Although Noreco has attempted to identify important
factors that could cause actual events or results to differ from those described
in forward-looking statements contained herein, there can be no assurance that
the forward-looking statements will prove to be accurate as actual future events
could differ materially from those anticipated in such statements. Except as may
be required by applicable law or stock exchange regulation, Noreco undertakes no
obligation to update publicly or release any revisions to these forward-looking
statements to reflect events or circumstances after the date of this document or
to reflect the occurrence of unanticipated events.


This information is subject of the disclosure requirements acc. to §5-12 vphl
(Norwegian Securities Trading Act)

Noreco presentation 28 sept 2012: 
 hugin.info/138447/R/1644473/529779.pdf



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