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Managing Director Jan Christian Ellefsen of Pandion Energy says in a comment:
“We look forward to today’s hearing in the Storting and subsequent proceedings related to the Government’s proposal for interim amendments of the Petroleum Tax Act. We hope that the Government and the opposition parties are able to agree on a solution that ensures the sanctioning of profitable projects and that we also in the future can create value together with a strong Norwegian oil service industry.”

Pandion Energy finds it encouraging that the Government proposes measures to support the industry but notes that the proposal in sum represents a tax increase. Also, that the liquidity effect for companies outside tax position is limited, which will be the case for Pandion Energy in 2020. The Company therefore stands behind the proposal presented by the Norwegian Oil and Gas Association but see the need to highlight the importance of final measures having the desired liquidity effect for all oil companies investing on the Norwegian continental shelf.

In reality, the Government’s proposal implies unequal treatment of companies inside and outside tax position. As it stands today, the proposed measures will have liquidity effect for the latter group only when the final tax assessment has been concluded, i.e. with an average lag effect of approximately 1.5 years related to investments and associated tax losses incurred this year. For companies in tax position, however, the measures have almost immediate effect through a reduction of the instalment tax payments. These are made regularly through six terms, three of which during the second half of the tax year and three in the first half of the following year.

The Government has attempted to neutralise this unequal treatment by allowing companies outside tax position to pledge the anticipated tax loss claim and, on this basis, enable bridge financing from banks and other lenders. For each individual company, however, it is currently unclear whether such bridge financing will be available, and if so, how much and at which terms.

Regardless of such bridge financing, Pandion Energy may in any case be prevented from moving forward with the planned development of the Hod oil field due to restrictions in its existing loan agreements.

Pandion Energy believes the Government could solve said challenges relatively easy within the existing tax payment cycle by allowing negative instalment tax, i.e. reimbursement of the nominal value of tax losses with the same frequency and profile as the ordinary instalment tax payments. This should be tax neutral for the state, but with the advantage of having same liquidity effect for all oil companies investing on the Norwegian continental shelf, whether inside or outside tax position. Such equal treatment is particularly important to ensure that sensible and socioeconomically profitable investment decisions are made even in cases where a field partner group consists of companies in different tax positions as is the case for Hod.

For further information, please contact:

Jan Christian Ellefsen
CEO Pandion Energy
tel: +47 91 74 48 99

Jan Christian Ellefsen CEO of Pandion Energy stated the following:

“2019 was another eventful year with solid operational performance for Pandion Energy. We continue to build on our strengths as an agile and professional team player on the Norwegian Continental Shelf, by a dedicated team with strong commercial and operational capabilities.”

“However, during the first three months of 2020, the world has changed dramatically. The coronavirus is spreading around the world, representing a significant threat to people’s health and causing severe consequences for the global economy, including a material drop in the oil price.”

Pandion Energy recorded revenues of USD 103 million for 2019, mainly related to the Company’s 10 per cent interest in the Valhall & Hod producing fields. Average net production was 4,334 barrels of oil equivalent per day, an increase of 8 per cent compared to 2018, and the average realised oil price was USD 66.4, a decrease of 7 per cent from the previous year.

The Board of Pandion Energy is closely monitoring the situation related to the corona pandemic and the massive drop in the oil price with the objective of making sure necessary measures are taken to protect the people and operations, and that the Company maintains liquidity and stays financially secure.

Pandion Energy remains committed to its strategy of being an active and responsible partner participating in all phases, from exploration through to development of oil and gas resources on the NCS. The Company will continue to invest in proven, high-quality assets with access to existing infrastructure and focus on the further development of its producing assets. The Board considers Pandion Energy to be well positioned for further growth.

Pandion Energy Annual Report 2019

Pandion Energy is pleased to announce the discovery of oil and gas in production license 820 S through the drilling of exploration well 25/8-19 S, including sidetracks A and A2.

The exploration well, including sidetracks, proved hydrocarbons at five different intervals.

Preliminary evaluation of the Iving discovery in the Skagerrak Formation shows recoverable resources of between 12 and 71 million boe (of which approx. 85 percent light oil) within the license area.

Recoverable volumes associated with the Evra discovery in the Eocene/Paleocene injectite reservoir sands, oil in weathered/fractured basement and other oil and gas carrying layers will be considered during the appraisal phase of the license.

At Iving, a gross gas column of 34 metres above an oil column of at least 45 metres was encountered in moderate quality Skagerrak reservoirs. The oil-water contact was not encountered in the well.

Extensive data collection and sampling was carried out in the wells, including pressure and fluid tests (Mini-DSTs) at multiple levels, as well as a successful well test in the Skagerrak Formation in the sidetrack well. Limited by design of surface equipment, the test was carried out with averaged oil and gas production rates of 475 m3/d and 75 600 m3/d, respectively, on a 32/64’’ choke. The measured GOR through the test averaged at 180 m3/m3, while the measured oil gravity averaged at 40 deg API.

Weathered and fractured basement (below a basal conglomerate) encountered an oil column of minimum 41 meter. The oil-water contact was not encountered.

Managing Director Jan Christian Ellefsen of Pandion Energy says in a comment:
“We are very pleased with making a material discovery in our second exploration well. This demonstrates the potential of our exploration strategy focusing on opportunities close to existing infrastructure. We look forward to maturing the discoveries and remaining prospectivity together with the PL 820 S partnership, as well as to commercialize the resource potential now proven in the license.”

These are the first and second exploration wells in PL 820 S. The permit was granted in APA 2015.

The wells were drilled by the semi-submersible drilling rig Deepsea Bergen approx. 8 kilometres northwest of the Balder and Ringhorne Field in the central part of the North Sea.

MOL Norge is the operator of the production license with a 40 percent participating interest. In addition to Pandion Energy (10 percent), the partnership also consists of Lundin Norway (40 percent) and Wintershall DEA (10 percent).

For further information see press release from the Norwegian Petroleum Directorate: Oil and gas discoveries near the Balder field

The Duva oil and gas field is located in the northern North Sea and was discovered in the autumn of 2016. The Plan for Development and Operation (PDO) was approved in June 2019 with first production expected in late 2020 / early 2021.

Pandion Energy has with this completed the sale of it’s 20% non-operated interests in the Duva oil and gas field and associated licenses.

Related post: 07. November 2019 – Pandion Energy divests its 20 percent share in the Duva field.

Pandion Energy AS and Solveig Gas Norway AS have completed their previously announced transaction, whereby Pandion Energy has sold 10% non-operated interests in PL 636, comprising the Duva oil and gas field, and PL 636B.

The Duva oil and gas field is located in the northern North Sea and was discovered in the autumn of 2016. The Plan for Development and Operation (PDO) was approved in June 2019 with first production expected in late 2020 / early 2021.

Pandion Energy has also sold 10% non-operated interests in the same licenses to PGNiG Upstream Norway AS. This transaction is expected to be completed early 2020.

Related post: 07. November 2019 – Pandion Energy divests its 20 percent share in the Duva field.

The Plan for Development and Operation of Valhall Flank West was submitted in December 2017. First steel was cut at Kvaerner’s yard in Verdal in April 2018. Just over one year later, both the jacket and the topsides were installed on the field with no additional carry-over work.

Valhall Flank West is a well head platform, that will normally be unmanned, tied back to the Valhall field centre for processing and export. The installation receives power from shore via the Valhall field centre, in line with the partnership’s strategy of minimising the environmental footprint.

Since FID, several additional wells have been sanctioned bringing the recoverable reserves from 60 to close to 80 million barrels of oil equivalent, with further drilling targets being evaluated.

Recoverable reserves for Valhall Flank West were estimated to be around 60 million barrels of oil equivalent based on the drilling of six production wells. Since then, several additional wells have been sanctioned bringing the recoverable reserves close to 80 million barrels of oil equivalent, with further drilling targets being evaluated.

The partnership has invested NOK 5.5 billion in Valhall Flank West development project, which has an estimated break-even price of USD 28.5 per barrel. Around 1,500 people have been involved in the project.

Jan Christian Ellefsen, CEO of Pandion Energy commented:

“This is truly a day to remember. Valhall Flank West is the first development project we have participated in as a partner on Valhall & Hod. We are very impressed with the execution of the project  and the way the involved parties have worked as one team, delivering one of the safest projects on the NCS, on schedule and within budget.”

For more information see press release by Aker BP.

Pandion Energy has agreed to divest its 20% share in the Duva field through two transactions, one with PGNiG Upstream Norway AS and one with Solveig Gas Norway AS, each acquiring a 10% share in PL 636 and PL 636B.

The Duva oil and gas field is located in the northern North Sea and was discovered in the autumn of 2016. The Plan for Development and Operation (PDO) was approved earlier this year, less than three years after discovery. With recoverable reserves of 88 million barrels of oil equivalent, the field is expected to produce around 30 thousand barrels of oil equivalent per day at its peak. The Duva field will be developed as a subsea tie-back to the nearby Gjøa platform, with first production expected in late 2020 / early 2021.

Our engagement in Duva represents the core of our strategy – to add value to high quality assets and mature them up the development curve – in this case with more than a 50% increase in recoverable resources since the initial discovery. With this sale, we will crystallise some of the value created in our portfolio to date, further strengthening Pandion Energy’s capacity to act on future opportunities.

Jan Christian Ellefsen, CEO of Pandion Energy, comments:

“Duva was the first discovery in our portfolio after forming Pandion Energy almost three years ago. We are pleased with the significant value created to date, having participated since the field was discovered through to development. Our engagement in Duva represents the core of our strategy – to add value to high quality assets and mature them up the development curve – in this case with more than a 50% increase in recoverable resources since the initial discovery. With this sale, we will crystallise some of the value created in our portfolio to date, further strengthening Pandion Energy’s capacity to act on future opportunities. We remain deeply committed to the Norwegian Continental Shelf and look forward to continuing to create value in our remaining portfolio and investing in new attractive opportunities on the shelf.”

The transactions are subject to customary conditions for completion, including approval by the Norwegian Ministry of Petroleum and Energy.

Capricorn Norge AS, operator of PL 842, has completed the drilling of wildcat well 6608/11-9. The well is reported dry. The well that was drilled about 13 kilometres northeast of the Norne field was testing a new play.

The primary exploration target for the well was to prove petroleum in Upper Jurassic reservoir rocks (the Rogn formation). The secondary exploration target for the well was to examine reservoir development in Upper Jurassic reservoir rocks (intra Melke formation sandstones).

The Rogn formation was not present in the primary target. In the secondary target, 118 metres with alternating layers of clay stone, siltstone and sandstone was encountered in the Melke formation, where about 40 metres was sandstone with moderate reservoir quality.

The well was drilled to a vertical depth of 1676 metres below the sea surface, and was terminated in the Not formation in the Middle Jurassic.

For more information see full press release from the Operator at the NPD webpage.

Pandion Energy AS (Pandion Energy) has entered into an agreement with ConocoPhillips Skandinavia AS (ConocoPhillips) to acquire a 20 percent interest in PL 891, containing the Slagugle prospect. The license is located in the prolific Haltenbanken area of the Norwegian Sea in blocks 6507/5, 6 and 8. Contingent on approval by the Norwegian Ministry of Petroleum and Energy, the operator will be making preparations to drill the Slagugle prospect in 2020, alternatively 2021.

CEO of Pandion Energy, Jan Christian Ellefsen, commented:

“With this farm-in we commit to our fourth exploration well in less than a year, demonstrating the importance of exploration and appraisal activities in Pandion Energy’s growth strategy. Once again we have identified and secured an attractive exploration opportunity close to existing fields and discoveries in the Norwegian Sea. Together with the upcoming wells in PL 842 (Godalen) and PL 263 D & E (Appolonia), we now have a portfolio of three exploration wells in this prolific part of the Norwegian continental shelf.”

PL 891 was awarded in the 2016 APA round and is operated by ConocoPhillips (100% before farm-down).

The transaction is subject to customary conditions for completion, including approval by the Norwegian Ministry of Petroleum and Energy.