Early 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