Norse Energy Special Shareholder Appeal – Sneak Preview

On July 5, Norse Energy Corp will hold what they call an “Extraordinary General Meeting” (EGM) for shareholders in Oslo, Norway. Norse Energy’s CEO Mark Dice will present to shareholders using the PowerPoint embedded below. MDN has included a rundown of what’s in the slides.

For better or worse, Norse has most of its investments in leases in New York State, and the now four-year long delay in adopting new drilling rules, called the SGEIS, has strained the company’s resources. They’ve refinanced debt, sold off assets, taken on investors and have done whatever they can to “hang in there” until drilling finally begins in New York. The slides in the presentation show just how key New York’s decision is to Norse’s future.

Of course, if the plan being talked about—allowing limited drilling in five counties for two years—happens, Norse can at least start drilling as most of their leases are in those five counties. But it’s not going to be a panacea for Norse when drilling does begin (it’s doubtful Norse will get all 50 of the permits rumored for the first year of drilling, for example). Still, you have to give them credit that they keep trying (see this MDN story).

Here’s a preview of the preso below—slides you will want to check out.

• Slide 5 charts the stock price for Norse Energy Corp (NEC) against the Oslo Stock Exchange Benchmark Index (its stock is traded on the OSE). What jumps out is that NEC dipped to 1.4 Krone (about 23 cents per share in US dollars) just a few weeks ago. For perspective, MDN has inserted NEC’s stock price chart for the past five years so you can see how far it’s fallen. In June 2008, for example, NEC’s stock briefly hit 70.73 Krone ($11.84 in today’s US dollars). Even at a price of 2.3 Krone, NEC’s stock has come down nearly 97% in value. Pretty darned close to insolvency we would say. Which is why the company has been scrambling to do deals, sell off assets, and do anything it can to stay afloat.
• Slide 6 & 7 show the major risk threats to the company, and their plans for dealing with them. The SGEIS looms large on the chart.
• Slide 9 shows a few recent quotes by NY Gov. Andrew Cuomo that NEC takes as a good omen that drilling will soon begin in the state. “Imminent” is the word they use.
• Slide 10 shows a regional map with an outline of the Marcellus Shale area. Inside the map are two ovals, one green and one red. The ovals are not identified but MDN believes they are areas where Norse has leased acreage—or perhaps the areas with the most potential for Norse. The red oval is generally the area where it is rumored drilling will begin if it begins in NY.
• Slide 12 shows a pie chart breakdown of how much gas reserves Norse owns by geologic formation. NEC believes the lion’s share of their gas will come from the Utica Shale in Central New York, followed closely by the Marcellus Shale in Central New York.
• Slide 13 is a price forecast chart from the US Energy Information Administration (EIA) showing where they think the price of oil will go from now until 2035. Very interesting—especially because the Bakken Shale, the Utica Shale and other shales are so rapidly changing the oil situation in the US that no forecasts are accurate more than a few months!
• Slide 14 is a price forecast from EIA for natural gas from now until 2035. Also fascinating. It shows that even the most optimistic price for natgas will not go much above $8 per million Btus during that period. And they’re best guess for prices over the next eight years, until 2020? Somewhere between $4-$5.
• Slides 15-17 begins the sales pitch where CEO Dice will try and talk shareholders into spending more money on the company with promises of good returns.
• Slide 18 shows the breakdown of monthly operating expenses for Norse. How much money they need to keep the doors open (~$1 million per month). And how much they need to drill a well once that begins (~$6-$7 million per well).
• Slide 19-21 finishes the sales pitch.