Nordic Energy announce results

Your Company was founded by a proven management team with significant experience in the North Sea and Nordic region. With our strong regional contacts, experience, and involvement in a number of major discoveries in the region we are well placed to take advantage of arising opportunities in our area of focus. In February 2013 we announced our intention to acquire the 3,600sq km Licence 1/13 (‘1/13’ or ‘the Licence’) in the Danish North Sea. The Licence is located off the west coast of Denmark updip of the mature Jurassic source rocks in the Danish Central Graben, the source of the major North Sea producing fields. At the time, the Licence was in the process of being acquired by NikOil Limited, a private company owned by the directors of Nordic Energy, with the intention of it being transferred to the Company on the approval from the government.

The Licence area is considered highly prospective, with multiple play types and structures. Two previous wells were drilled on the Licence in 1970s, one of which, the R 1 well which was drilled in the northern part of 1/13, encountered gas in the Miocene and was estimated to flow 2 million cubic feet of gas per day during controlling operations. Based on previous technical work, ten large prospects and leads have been mapped. The Licence contains six oil prospects and leads with potential P50 recoverable resources of 1.2 billion barrels of oil and four gas leads with potential P50 recoverable resources of 2.8 trillion cubic feet of gas. The mapped structures occur at a range of geological horizons, i.e. Top Mid-Miocene, Palaeocene Channels, Top Chalk, Top Rotliegendes and Top Pre Permian.

Whilst the formal award of the Licence was in process we secured an option to acquire 11,600km of existing 2-D seismic data and a pseudo 3-D seismic data volume which has now been received. We anticipate that the use of this innovative technology will further increase the prospectivity of the Licence. This data combined with data from the two existing wells is being interpreted in order to determine drill ready prospects. An updated CPR will be completed in Q1 2014.

As previously stated, post period end in September 2013, we completed the formal transfer and acquisition of Licence 1/13. Following this transformational acquisition we are now the largest net licence holder in the Danish North Sea. With the current mapped prospects sharing similar characteristics to the super giant Johan Sverdrup oil discovery (>3.3billion barrels recoverable) we are eager to step up our exploration activities to progress towards a drill programme on the Licence.

Through our wholly owned Danish subsidiary we are the operator of the Licence with an 80% equity interest. The remaining 20% interest is held by Nordsoefonden, the Danish State Oil Company, with a fully paying working interest arrangement. The consideration paid for the acquisition of 1/13 comprised the payment of the Licence award fee of Danish Krone 100,000 (£12,000) directly to the Danish Energy Agency and the issue of a convertible loan note for 8,320,000 shares in the Company to the shareholders of Nikoil Limited. The Directors consider the terms of this transaction highly attractive for Nordic Energy as it has allowed for the acquisition of a valuable asset with a moderate initial work programme on terms preserving cash. The Licence term is for three two year periods for exploration and up to 30 years for production. The work programme for the first two year term consists of studies using existing data seismic and well data, which can be financed from existing cash.

Furthermore, in order to preserve cash the Company has established and maintains a carefully managed cost base as can be seen from the published results and will continue to make appropriate efforts to preserve shareholder value as the Company develops.

In addition to our Danish project, we have been evaluating a number of further opportunities in the Nordic region including the purchase of producing assets with a view to using surplus cash flow for the financing of future exploration and working capital needs. In connection with our efforts to acquire production, we have established relationships with a large number of finance providers. This work has resulted in a clear current understanding of market sectors and requirements and our established contacts can now be used to quickly check availability of funding for a specific asset, and to complete a transaction.

Corporate Review:

Over the period we made a number of corporate appointments in order to facilitate the growth of the Company. In April 2013 we appointed Cairn Financial Advisers LLP as our ISDX Corporate Adviser, in May 2013 St Brides Media & Finance Ltd was appointed as our Financial Public Relations Adviser and in September 2013 First Columbus LLP were retained to provide investment support

We were also delighted to welcome Ian Donald and Kenneth Seymour as non executive directors to the Company in May 2013. They both bring additional extensive oil and gas experience to the team and we look forward to working with them.

Outlook:

Our acquisition of Licence 1/13 highlights the progress made by the Company over the period. The year under review has seen us achieve our various stated objectives and Nordic Energy is now well placed to benefit from a number of upcoming milestones in the development of this exciting licence which are designed to grow shareholder value. With exploration work already underway, a low cost development programme in place to further define the prospectivity of the Licence, and near term value drivers in the pipeline we anticipate further positive newsflow in the coming months.

Whilst our focus is currently on developing our newly acquired Licence, we maintain a pipeline of potential projects with a view to adding further exploration assets as well as production to our asset base in line with our strategy of building a multi stage portfolio in the UK, Danish and Dutch offshore sectors.