In an effort to contribute to a faster stabilization of the oil and gas industry following the demand disruptions caused by COVID-19, the Norwegian Government announced in April its decision to implement production restriction measures for oil production for 2020. For the Company’s portfolio, the main impact relates to the Draugen field, as the Gjøa field (12.00% WI) is exempted from the production limitations.

Permitted production volumes for Draugen (44.56% WI) for June and H2-20 have been reduced from a total of 3.63 million bbls to a total of 3.43 million bbls. In order to re-optimize the operation and production at Draugen, the license has decided to move the bi-annual maintenance shutdown from September to late June. On this basis, OKEA maintains the production guidance for 2020 of 14,000 – 15,000 boepd on average for the year. The revised shutdown schedule results in a postponement of an OKEA lifting which was previously planned for June to August which, due to revenue from sale of petroleum products being recognized in the financial statements at lifting, will increase the risk of a breach in bond covenants for Q2 2020.

Implementation of COVID-19 related infection control measures and travel restrictions has resulted in significantly lower availability of personnel at the Aker Solutions yard in Egersund where the Maersk Inspirer rig for the Yme project (15.00% WI) is undergoing an upgrade. Consent for using the rig on the Yme field was given by the Petroleum Safety Authority 18 May. In case of prolonged restrictions, in addition to the inherent schedule risk of all large modification projects, OKEA expects first oil for Yme to be delayed to the first half of 2021. OKEA continues to work closely with operator Repsol to ensure a robust and safe project execution.

OKEA is currently in dialogue with bondholders in OKEA02 and OKEA03 to discuss terms of a temporary waiver. The Company is also monitoring the progress of the Norwegian Government’s proposed temporary changes to the petroleum tax regime, which may have a material positive liquidity effect for OKEA. A final resolution by the Norwegian Parliament is expected before Parliament’s scheduled summer leave on 19 June. The Company intends to await the recommendation from the Government’s Finance Committee, which is expected on 4 June, prior to summon for bondholders’ meetings.

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