Det Norske Oljeselskap ASA (DETNOR) needs to increase its workforce and retool its business to become a fully fledged producer, said Aker ASA (AKER), the investment holding company of billionaire Kjell Inge Roekke.
“An improvement in operated exploration activity is needed,” Oeyvind Eriksen, chief executive officer at Aker, which owns 49.99 percent in Det Norske, said in a Nov. 9 interview in Oslo. “We would like to see a new CEO who not only can maintain and improve exploration activity, but also lead Det Norske through field development and production stages.”
Erik Haugane, who founded Det Norske in 2001, announced in October he will step down as CEO even after the company’s share price more than tripled (DETNOR:US) since late 2011. The Trondheim, Norway- based company is part of a group that owns the North Sea Johan Sverdrup field, which was discovered in 2010 and may hold 3.3 billion barrels of oil. That’s the biggest find off Norway’s shores in almost 40 years.
Det Norske has been an “outstanding” investment, Eriksen said. “Nevertheless, we think the company must improve operationally, and that’s why we encourage the board now to strengthen the team, not only the CEO position but the whole of the organization.”
Det Norske’s shares were little changed at 84.95 kroner as of 9:48 a.m. in Oslo. Aker rose 2 percent to 207 kroner.
The next CEO should be “in place early next year,” said Eriksen, declining to comment on possible candidates for the job.
The shares also received a boost in September when Det Norske and partner Statoil ASA (STL) struck oil at nearby Geitungen, which may be linked to Sverdrup and add more than 200 million barrels of crude. Statoil, Norway’s largest oil and gas producer, was named working operator of the Sverdrup oilfield in March.
“We need to improve and increase our competencies and develop from being a simple exploration company to a fully- fledged oil company,” Det Norske Chairman Svein Aaser said by mobile phone on Nov. 9. The company is hiring at all levels of the organization, he said.
The company has paid for its lack of experience. It took a 1.9 billion kroner pretax charge on its North Sea Jette development in the third quarter after “technical challenges” raised costs and reduced volumes.
“We’ve had significant challenges there,” Aaser said. In hindsight we should have perhaps made organizational changes before development of Jette, he said.
Because of Jette and higher-than-anticipated exploration costs, the company posted a net loss of 588.9 million kroner ($103 million) in the third quarter, exceeding the 100.1 million kroner average estimate of nine analysts in a Bloomberg.
Aker, a holding company that’s 66.66 percent owned by Roekke, on Nov. 9 reported net income fell to 98 million kroner in the quarter from 523 million kroner a year earlier as its operating expenses increased.
Sverdrup, potentially the third-biggest discovery offshore Norway since oil was first found in 1969 and the biggest since Statfjord in 1974, is a combination of two North Sea finds by Statoil and Sweden’s Lundin Petroleum AB. (LUPE) The partners in Sverdrup, which are in talks about how to develop the find, will issue an updated resource estimate for the field in early 2013, Statoil Chief Financial Officer Torgrim Reitan said on Oct. 26.
To contact the reporters on this story: Kristin Myers in Oslo at firstname.lastname@example.org; Mikael Holter in Oslo at email@example.com
To contact the editor responsible for this story: Jonas Bergman at firstname.lastname@example.org