Norwegian oil explorer North Energy believes mergers and acquisitions can help the firm weather the current oil market downturn as it becomes difficult to make profitable discoveries at today’s crude prices, it chief executive said.
North Energy has yet to make a commercially viable oil find, and is going through an extensive restructuring in response to adverse market conditions that have made it much harder for small oil firms to finance their operations.
“What’s underpinning this is that the market does not allow us to explore more,” chief executive Knut Saeberg said at the company’s fourth quarter presentation.
Saeberg said that he wanted to take advantage of opportunities now being priced lower because of the current market turmoil.
“Our original model of exploring, finding and selling oil discoveries is struggling now because of the low oil price. It’s to survive in a difficult time period.” he said.
“We want to build North Energy to a stronger company and in order to do that we have to expand our horizon,” Saeberg added.
To counter the 70% decline in crude prices since mid-2014, the firm reduced its operating costs by 24 percent by the end of the fourth quarter compared to a year earlier.
At the start of 2016, North Energy had a net cash position of NK188.3million ($21.77 million), down from NK219.1million.
It reported a fourth-quarter net loss of NOK23.6million, compared to a loss of 28.4 million in the same quarter of 2014.
Over the past two years, shares in North Energy have fallen 74.2%, including a 6.8% drop on Thursday.