Norse Energy

Norse Energy issued a press release last week to update stockholders and investors on where the company stands with its finances. Bottom line? Unless something changes, the company will run out of money in December. They have $1.5 million in the bank and that will get them through to December. If the people who have loaned them money (floated them bonds) don’t rework the financing, or if Norse can’t come up with more money from somewhere—like now—let’s just say it’s not good news.

Norse is still holding out hope that New York, where they have some 130,000 acres under lease, will finally allow fracking to commence. That gamble (so far) has not paid off. Here’s the Norse statement issued yesterday:

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Good ol’ Norse Energy—the Norwegian-based driller who rolled the dice on New York State and (so far) lost the bet. You have to admire Norse. They signed a lot of acreage in Upstate New York—some 130,000 acres. Their intent was to frack the shale—but something happened on the way to the fracking dance. NY slapped a moratorium on shale gas drilling that’s now gone on for 4 1/2 long years.

Norse has done what it can to stay solvent ahead of NY’s release of permits to drill. They hope to be among the first to receive said permits when NY finally moves forward (they have already filed for permits). Every now and again Norse issues a press release to essentially say, “We’re still here and still hanging on.” This is the latest such release:

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Norse Energy, a driller who has gambled on New York State allowing hydraulic fracturing (and has so far lost that gamble), just awarded stock options to a few key employees, including the CEO, CFO, Chief Legal Officer (CLO), and several vice presidents. Typically an organization floats stock options to key people in order to keep them from jumping ship before the company either hits it big or sells out to another company.

Is Norse considering a sale of the entire company? MDN doesn’t have a clue. If they are, it likely would not happen for at least a year or two—long enough for the New York moratorium on fracking to be lifted and for drilling to begin. Once that happens, Norse believes they will be in the pole position—perhaps even first in line—to receive permits to drill in the Marcellus and Utica Shale. And what better time to sell than that?! When the moratorium is lifted, if Norse receives many or even most of the permits to drill, their stock will soar.

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Norse Energy is an interesting company. MDN has written plenty about them. They have 130,000 acres of leases in, of all places, New York State. And they’ve been waiting, along with everyone else, four long years to begin drilling. And they’ve done whatever they can to stay in business, selling off assets, selling ownership slices of the company, floating bonds (debt), obtaining loans—whatever they can.

On one hand you have to have tremendous respect for a company that hangs tough. On the other hand, you want to ask them if they need their heads examined for betting the ranch on the vagaries of New York politicians.

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It looks like today’s “extraordinary shareholder’s meeting” for Marcellus & Utica Shale driller Norse Energy, held at corporate HQ in Norway, has yielded the desired result. As MDN pointed out in our sneak preview of the shareholder presentation (see this MDN story), Norse was pitching existing shareholders on the concept of giving Norse more money to drill because “New York is almost ready to allow drilling” and when that happens, Norse will need the cash to ramp up operations. (Plus, they need the cash to keep going until then.)

Norse just issued a press release that they’ve raised an additional $2 million from existing shareholder Megaron AS, who agreed to a convertible loan. It was a good deal (potentially) for Megaron—they’re getting 10% interest on the loan.

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