Norse Energy “Reduces” Employees by 50 Percent

You are firedEarly today, Norse Energy, a Norwegian company with gas drilling operations in New York State, issued an interesting press release about laying off half of their employees (see the full release below). Norse holds some 180,000 net acres of natural gas leases in New York, of which 130,000 are in the Marcellus and Utica Shale zones.

Until recently, Norse was using conventional vertical methods of drilling for natural gas in Upstate New York counties like Chenango and Madison. But Norse announced in early August that they are “betting the farm” that New York will adopt new regulations to allow shale gas drilling, and so they have focused the company on that prize. So much so they have filed the very first permits to drill in the Utica Shale in New York and have ceased all other kinds of gas drilling until it happens (see this MDN story).

So while Norse waits for shale drilling to begin, they’ve gotten rid of half their employees. The opening line of the release below says 30 percent are now gone, but further down the release it says 50 percent are gone since the beginning of this year, the total number coming not only from recent layoffs but also from sales of certain pieces of the business. No doubt the release is aimed at investors, trying to assure them that everything is OK and just sit tight, drilling will happen soon and when it does Norse will hit the jackpot. And that may well be true! But it sure doesn’t give those who have lost their jobs a warm and fuzzy feeling that Norse is focused on “preservation of cash while awaiting” the new drilling regs to be approved.

Seems to MDN that people ought to be more than just “overhead costs” and something to be “reduced.”

Norse Energy Corp. ASA announces that is has completed staff reductions of approximately thirty percent of its work force. The Company has been working diligently to reduce its overhead costs while awaiting the opportunity to drill into the Marcellus and Utica shale formations in New York.

The full draft Supplemental Generic Environmental Impact Statement (SGEIS) was issued on September 7, 2011 by the New York State Department of Environmental Conservation with a public comment period through December 12, 2011 and an anticipated commencement of permitting in early 2012.

“We continue to focus on preservation of cash while awaiting the opportunity under the SGEIS to develop our significant shale resources”, commented Norse CEO Mark Dice.

Earlier this year Norse sold non-essential pipeline and marketing assets and, with these announced adjustments, has now reduced its work force by about 50 percent since the beginning of 2011.

Norse Energy had total contingent resources of ~3.9 TCF (~700 MMBOE) at the end of 2010. The Company has a significant land position of 180,000 net acres in New York State of which ~130,000 are in the Marcellus and Utica shale fairway.*

*Norse Energy Press Release (Sep 21, 2011) – Norse Energy Announces Staff Reductions

  • Anonymous

    Its very upsetting to hear this news. While our neighbors are experiencing job growth, business profits and booming economies, the New York political machine is alive and well destroying dreams of prosperity and hopes of economic renewal. We must vote these idiots out of office. We have the power to do it. Let Freedom ring!!!

  • SamB

    Seems to MDN that people ought to be more than just “overhead costs” and something to be “reduced.”
    But is that not the capitalist way you support? Is this not just the logical conclusion from the system that we live in? This is the very reason that regulations, consumer protections and laws exist, because left to the truly free market, people are no more than a commodity to be traded.

  • Jim Willis

    Thanks for commenting Sam. No, I’ve not lost the capitalist way–I’m all for capitalism–it’s the only economic system that promotes true freedom. I think the free market can and should take care of itself. It doesn’t need us meddling.

    So while I support Norse Energy’s right to do whatever they way (and they should NOT be forced to retain people), our freedom of expression says we can say “yeah, but it’s pretty heartless to do what you’ve just done, and therefore, if I’m a landowner, maybe I’ll sign with someone else.” The two views are not incompatible. I’m calling them out for sleazy practices, but not insisting we pass laws to regulate them to death.

  • Anonymous

    Norse Energy is a company on life support.  It has been selling off “non-core” assets for years to support its drilling the Herkimer Sandstone in Chenango and Madison Counties: Medina wells in western NY, off-shore wells in Brazil, and its pipeline in Chenango/Madison.  Then just recently it sold off part interest in some of its core Herkimer assets to Bradfor Energy Capital XXIX LLC.  (Norse drills horizontal but unfraced wells in the sandstone.)  It seems to be unable to turn a profit on drilling the Herkimer: “not satisfied with the capital efficiency of the first five wells {since aquisition of 3D seismic data}”.  Then in August, despite forcasting the drilling of 11 wells this year, it suspended Herkimer drilling to save capital for shale drilling once the SGEIS is finalized.  Now it is laying off staff to save capital.  Norse is “doubling-down” in shale wells despite the fact that profitable shale wells in PA are several 10s miles to SW.  Such gambles have paid-off before in E&P, but not often.

  • Paoli Pete

    I read that northern Chenango county isnt right for Marcellus shale/fracking anyway since the deposits are not deep enough (2000 ft vs over 4000 required for the fracking technology).  Just something I read, dont know anything about the technology myself.  I have land in NW corner of chenango and am watching the developments in this area. . . .

  • Jim Willis

    I’ve heard the same thing Pete. But I’ve also heard it’s a great spot for Utica Shale, another few thousand feet below the Marcellus. And It’s the Utica that Norse is targeting in Chenango, Madison and other CNY locations.

  • Pingback: Norse Energy in Trouble, Wants Bondholders to Become Stockholders | Marcellus Drilling News()

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