Oslo, Norway, 13 February 2020: MAGNORA ASA, a leading Norwegian royalty and license revenue company reports fourth quarter 2019 results.
Q4 2019 Highlights:
• The company has assessed over 100 investment opportunities in Norway and abroad in various industries during 2019. During second half last year, we decided to focus on the renewable energy industry and companies with solutions for long term sustainability. This focus has yielded a solid deal-flow within the renewable energy space, and we have engaged two advisors with significant experience from the renewable energy industry. Theis Hanang Pedersen is former Country Manager of Vestas Norway and Haakon Alfstad is former Head of Onshore Wind in Statkraft, and will work together closely with the company’s Executive Chairman, Torstein Sanness, and CEO, Erik Sneve, to review these opportunities. We have a strong focus on asset light business models that can benefit from Magnora’s strategic platform.
• The revenue from the Western Isles agreement was NOK 8.8 million (NOK 9.2 million) for Q4. The agreement gives Magnora the right to USD 0.5 per barrel produced and offloaded from the Western Isles FPSO (the “FPSO”) during the lifetime of the FPSO. The Western Isles development is expected to have a field life of 15 years. The FPSO is expected to have a design life of 20 to 25 years, and thus could produce for longer than 15 years. Magnora´s right to payments is tied to the FPSO, irrespective of operating location and field. Any potential field tied-back to the FPSO or any redeployment, irrespective of location, will also be subject to the payment obligations under the agreement. The Western Isles agreement is expected to generate income for Magnora in the years to come. The FPSO is owned and operated by Dana Petroleum and is currently producing at the Western Isles development in the UK sector of the North Sea. Production started in Q4 2017. The FPSO has a production capacity of 44,000 barrels per day. From start of production, the Western Isles FPSO has produced over 20 million barrels. At first investment decision (FID) the operator estimated the field to have 45 million barrels economically recoverable. Typically, fields in the North Sea produces much longer and more than anticipated at FID.
• The Penguins agreement gives Magnora the right to future license income of approximately USD 16 million from the Shell Penguins FPSO project. The Penguins FPSO is currently under construction in Asia. The payments of USD 16 million in total are tied to three milestones. These three milestones are: 1) the completion and sail away of the Penguins FPSO from the construction yard 2) the installation of the Penguins FPSO at the field and achievement of first production, and 3) the successful production, offloading and export of 4 million barrels which is estimated to be approximately 6 months after successful start-up. It is anticipated that the construction of the Penguins FPSO will be completed in Asia during mid-2021. Achievement of the further milestones will take place subsequently.
• Adjusted EBITDA, as defined in note 1, was NOK 7.0 million (NOK 7.5 million), a decrease of NOK 0.5 million versus the previous quarter. The main driver for the decrease was a lower revenue from the Dana Western Isles project.
• Operating cost for the quarter excluding one-off items was NOK 1.8 million, which is a decrease of NOK 0.4 million compared to the previous quarter. The decrease was mainly due to lower employee expenses and overhead.
• Net profit for the quarter was NOK 6.3 million, which is an increase of NOK 1.5 million compared to the previous quarter. The increase was mainly due to an annual evaluation and subsequent NOK 2.5 million adjustment of the deferred tax asset.
• The Board and management currently believe 2020 revenues from Magnora’s contracts will be close to 2019 revenues based on current operational and foreign exchange assumptions. IHS Petrodata (IHS), a market intelligence company within the oil and gas industry, reported on February 10th that Dana Petroleum in late December, 2019, engaged Stena Spey (owned by Stena Drilling), a semi-submersible offshore drilling unit later this year for a drilling campaign on the Western Isles and Bittern fields. IHS further states that Dana’s base case scenario is likely to be another well on Western Isles in 2021. Increased drilling should be very positive for production going forward.
• Last quarter, the company performed a comprehensive review of the paid-in capital made since the establishment of the company. The review concludes that approximately NOK 8.4 billion (NOK 159 per share) of capital paid in to Magnora is available for distribution of equity back to the shareholders. Distribution of equity can be a tax advantage for some shareholders depending on local tax rules where the shareholder has residency.
About Magnora (OSE: MGN): Magnora ASA is a royalty and license company looking for profitable investment opportunities. The company is listed on the main list on Oslo Stock Exchange under the ticker MGN. ASA is a royalty company looking for profitable investment opportunities
For further information, please contact:
Erik Sneve, CEO, Magnora ASA
This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.