Norwegian Energy Co. ASA plunged as much as 76% in Oslo trading after saying it may not meet financial commitments at the end of the year because of a shutdown at its Huntington oil field this month.

The producer sank to 2.34 kroner (US36cents) as of 2:44 p.m. in the Norwegian capital, headed for the lowest close since it listed in 2007.

Noreco, as the company is known, may need to write down reserves at the Huntington and Oselvar fields, resulting in impairments of about 700 million kroner ($109 million) and 100 million kroner ($15.5 million), respectively, the Stavanger-based company said in a statement Oct. 1. Chairman Morten Garman resigned along with fellow board member Erik Henriksen, Noreco said.

“Noreco’s recent operational and financial update looks like a nightmare,” Teodor Sveen Nilsen, an analyst at Swedbank AB, said in an e-mailed note to clients. “We do not rule out that the value of the company’s equity virtually is lost and we believe there is a very high probability for a substantial financial restructuring.”

Noreco bondholders approved a 3.1 billion-kroner refinancing plan as late as November as the company was facing insolvency following shutdowns at fields off the U.K., Norway and Denmark. The company at the time replaced six bonds with four new ones carrying longer maturities and lower interest rates, while raising 530 million kroner selling new shares.

Financial Commitments

“This new information regarding an extended production shutdown on Huntington creates uncertainty about the company’s ability to meet its financial commitments and covenants towards the end of 2014,” the company said. The Huntington development will “impact cash balances through 2015 and onwards.”

The company is examining “mitigating measures” with advisers Arctic Securities ASA and Pareto Securities AS to secure a sustainable financing solution, it said. It’s also working with partners at its oil fields to improve production levels.

Swedbank’s Sveen Nilsen, who maintained his advice to reduce holdings of Noreco stock, said not all the company’s bonds were safe in a financial restructuring. While Swedbank estimates the total recovery factor at 60% to 70%, little or no value could be left in two of the bonds, known as NOR11 and NOR12, he said. The two bonds, due in 2019 and 2018, respectively, have a total outstanding amount of about 1.1 billion kroner, according to the company’s website.

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