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A cluster of high-profile hedge funds hopes to change the fortunes of a defeating North Sea oil and gas company in which they have built up considerable positions as energy prices soar.
Taconic Capital, CQS and Kite Lake Capital are among the funds holding positions in Norwegian Energy Company (Noreco), the second largest oil and gas producer in Denmark, whose shares have fallen more than 99% since its crisis high pre-financial.
Taconic and Kite Lake own more than 50 percent of the company. CQS, one of London’s largest funds, revealed a share of just under 13% in March, with part of the fund’s position personally led by billionaire founder Michael Hintze.
Caius Capital and Astaris Capital, a hedge fund launched last year by Martin Beck, a former co-founder of Sothic Capital, also hold positions, while York Capital has also been a shareholder.
Noreco has a market capitalization of just 3.14 billion Norwegian kroner (270 million pounds), and it is unusual to have such a high concentration of hedge funds in its shareholder register.
Last week, the funds hardened their business even further, as Peter Coleman of Taconic and Jan Lernout of Kite Lake were voted on by the board at the firm’s annual meeting.
Noreco was once Norway’s second-largest oil and gas company by production, but was hit by falling oil prices during the financial crisis. The firm has also suffered after cracks were found on one of its oil rigs in 2009. In 2018, it lost the court case for about $ 470 million it had contributed to 20 insurance companies it hoped to pay for the cracks.
But later that year Taconic, Kite Lake, CQS and York helped finance Noreco’s purchase of Shell’s Danish assets, making it the second largest oil and gas producer in Denmark.
Hedge funds now place their hopes on what the company predicts will double production by the second half of 2023, helped by the redevelopment of one of the fields in which it participated as part of the asset purchase. a Shell.
One of the funds said the decision to sit on Noreco’s board was designed to support management in increasing gas production.
The price of Brent crude fell from US $ 66 in late 2019, but fell below $ 20 last April as the coronavirus pandemic forced economies to close. However, prices have risen to $ 70 this week, a two-month high as traders bet on higher demand as economies open up and international travel slowly resumes.
The funds also hope to benefit from mergers and acquisitions in the energy sector, which includes Chrysaor reverse acquisition of Premier Oil late last year and of Waldorf Production purchase of Cairn Energy’s North Sea assets in March.
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