Hopeful that it is seeing the final months of a moratorium on high-volume hydraulic fracturing (HVHF) tick away in New York, Norse Energy Corp. ASA — a company that, like many others, has suffered through years of uncertainty at the hands of the delay — is positioning itself to hit the ground running in the Marcellus and Utica shales.

Norse said Thursday it has agreed to sell its operated production and other assets in the Empire State for $37 million to EmKey Resources LLC, which in turn has committed to constructing a pipeline capable of transporting a minimum of 90,000 Mcf/d, once Norse nominates for firm transportation.

“While we conveyed approximately 22,000 acres held by production, we retained a 37.5% interest in the Utica rights over that shale,” Dennis Holbrook, Norse executive vice president, told NGI. “We obviously think we see very significant potential in the Utica in those areas that we’re holding presently by production. And if the shale in New York has the potential that we believe it does, we have a party that is also committed to building a pipeline.”

EmKey is a privately owned company led and partially owned by Oivind Risberg, a current Norse board member and former Norse Energy CEO. Risberg also formed Appalachian Transmission and Marketing LLC, which purchased midstream assets from Norse in early 2011.

Norse shareholders will meet in April to consider the deal, but if approved the company will own or lease approximately 131,000 net acres in New York. That will leave the Norwegian company with about 98,000 net acres in the Marcellus and Utica natural gas fairways in central New York — which the company considers its “core asset base” — and about 33,000 net acres in the liquids-rich portion of the Devonian Shale in the western part of the state.

“One of the key elements for us is that this sale, in combination with a deal that we just structured with our bondholders, has allowed us to significantly reduce the overhead on our financial position,” Holbrook said. “A year ago at this time we had $110 million in debt. With this last transaction we’re down to the $10 million to $15 million range.”

Norse almost threw in the towel on New York. Last fall, it put most of its leasehold in the state up for sale, began looking into joint venture (JV) possibilities and mulled a shift toward Pennsylvania (see NGI, Oct. 31, 2011).

But with the New York Department of Environmental Conservation (DEC) making headway on its revised supplemental generic environmental impact statement (SGEIS) on fracking, Norse is finding a renewed sense of optimism.

During the company’s 4Q2011 presentation to investors on Feb. 28, Norse revealed a timeline in which it estimated that the DEC will need until at least May to finish perusing the more than 60,000 public comments it received for the SGEIS. But the company said it believes the agency should issue a final decision on fracking by June. If that happens, Norse anticipates permitting could begin in July followed by drilling in October.

DEC spokesperson Lisa King told NGI the agency has so far received 65 permit applications to conduct HVHF in the Marcellus Shale. Of those, 47 were submitted by Chesapeake Energy Corp.; 10 were from Fortuna Energy Inc.; seven were from Norse, and one was from Vertical Resources Inc.

According to the DEC, Norse has submitted seven permit applications for HVHF wells in the Marcellus Shale. It is also the only company with applications to drill HVHF wells into the Utica Shale. Holbrook confirmed the company has an additional 22 permit applications in the works.

During the Feb. 28 meeting Norse revealed that it had sold $26.7 million in acreage and royalties to fund operations through 2Q2012. About 22,700 acres in central New York were sold, along with an average 4% overriding royalty interest of its holdings in central and western New York.

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