Rocksource ASA - Q3 Financial results

Rocksource ASA posted a net loss in the third quarter of 2011 of NOK 93.9 million, compared to a loss of NOK 59.0 million in the third quarter of 2010.

Exploration expenses totalled NOK 300.4 million in the quarter, including previously capitalized exploration expenses of NOK 255.8 million. Exploration costs reflected a high activity level in the quarter. EBITDA was negative with NOK 294.7 million in the quarter versus negative NOK 53.2 million in the corresponding quarter 2010. 

The cash balance at the end of the third quarter was NOK 340.7 million, a NOK 140.1 million reduction from the end of previous quarter.

Following a weaker than expected outcome of the Company’s 2011 drilling campaign, Rocksource is now focusing its efforts to secure a basis for future growth. This includes reduction in cost base in the short term, and to firming up the next set of wells in the medium term. There is still a large exploration potential in the existing portfolio, and the Company aims to repeat previous successes in the upcoming licensing rounds on the NCS.

Further, the Company has taken a strategic decision to expand its business model to also include non-EM prospectivity. EM technology shall remain an important part of the Company’s exploration model. However, the Company realizes the need to mature more wells faster and cheaper than what has been the case in the past. Hence Rocksource will going forward evaluate non-EM prospectivity to add to the Company’s opportunity set.

In October the Company completed its first operated exploration well on the NCS. The operations were conducted in a safe and timely manner without incidents. Having demonstrated its capabilities as an operator, Rocksource is now in a position to capitalize on this going forward, in both upcoming licensing rounds and in potential farm-in negotiations. 

The Norvarg gas discovery is looking promising and the partnership has sanctioned an appraisal well scheduled for late 2012. Rocksource believes Norvarg has the potential to be a key asset in the development of gas infrastructure in the Barents Sea. The Company will carefully consider all options to maximizing shareholder value based on the Norvarg discovery.

Currently there are no firm exploration wells sanctioned for drilling in 2012. There are however several upcoming drill or drop decisions, including PL 506S, 515 and 528. Progress in the Gulf of Mexico is still slow and the Company has so far not succeeded in farming down its drill ready prospect in the Gulf, although this process is still ongoing. A second drill ready prospect will be marketed early in 2012.

With its current portfolio and financial frame Rocksource aims to firm up a minimum of four wells to be drilled over the next 18 months.

Follow this link to access the full interim report and the Q3 presentation:
http://www.rocksource.com/presentations/category157.html
http://www.rocksource.com/financial-reports/category159.html
 

Oslo, 22.11.2011
Rocksource ASA


Per Anders Muri
VP Corporate Communications

+47 91 11 61 21