DNO ASA, the Norwegian oil and gas operator, today announced a tripling of production from the Peshkabir field in the Tawke license in the Kurdistan region of Iraq to 15,000 barrels of oil per day (bopd) following completion of the Peshkabir-3 well testing, stimulation and cleanup program.

A total of 11 zones in a 1.2 kilometer horizontal section of Cretaceous and Jurassic reservoir in the Peshkabir-3 well were individually tested and flowed successfully, of which ten were oil zones and one a gas zone.

The oil zones tested an average of 5,340 bopd per zone on a 64/64″ choke, with the highest individual test rate of 7,200 bopd. A multi-zone combined production test totaled 12,500 bopd on a 128/64″ choke from five zones.

Production from the previously drilled Peshkabir-2 well, in operation since May, together with that of the new Peshkabir-3 well are currently processed through temporary test package facilities and trucked to DNO’s adjacent Tawke field facilities for export.

As previously announced, the Tawke license partners are proceeding with fast track plans to commission an early production facility by yearend and complete installation of pipeline connections early in 2018 to allow ramp up of output at the Peshkabir field.

Preparations are underway to drill the Peshkabir-4 well which will also be designed to test the underlying Triassic reservoir.

DNO operates and has a 75 percent interest in the Tawke license, with partner Genel Energy plc holding the remainder. The license contains the Tawke and Peshkabir fields whose combined year-to-date production has averaged 110,000 bopd.

(Source: DNO)

DNO ASA, the Norwegian oil and gas operator, today announced flow rates of more than 3,000 barrels of oil per day (bopd) from the first zone tested in the Peshkabir-3 well in the Kurdistan region of Iraq. Nine other oil zones and one gas zone have been identified for testing in a 1.2 kilometer horizontal section of Cretaceous and Jurassic reservoir.

The Company has fast tracked the development of the field and an early production facility will be commissioned by year-end. The previously drilled Peshkabir-2 well has produced at a steady rate of 4,700 bopd since May and comingled with over 100,000 bopd from the adjacent Tawke field for export. DNO’s operations in Kurdistan continue uninterrupted.

DNO is the most active driller in Kurdistan with three rigs deployed and 15 wells in 2017 across three operated fields in various stages of production, development and appraisal. Most recently, the Company spud the Hawler-1A multilateral well in October to appraise the Benenan heavy oil field in the Erbil license.

The Company has received year-to-date export payments totaling USD 297 million net to DNO, up from USD 210 million during the full-year 2016. With continuing export payments, DNO will step up investments in Kurdistan in 2018.

The Company today released its third quarter operating and financial update, reporting an operating profit of USD 469 million during the quarter. This follows recognition of USD 556 million as other income following the receivables settlement agreement with the Kurdistan Regional Government in August 2017.

Pursuant to the agreement, DNO was assigned an additional 20 percent in the Tawke license, bringing the Company’s operated stake to 75 percent. Partner Genel Energy plc holds the remaining 25 percent interest.

DNO’s cash balance stood at USD 399 million at the end of the third quarter, up from USD 261 million at end-2016. With the strengthening of its balance sheet, the Company’s equity ratio has increased to 60 percent.

(Source: DNO)

DNO ASA, the Norwegian oil and gas operator, today announced an agreement with ExxonMobil to join the Baeshiqa [Bashiqa, Bashika] license in the Kurdistan region of Iraq.

DNO will assume operatorship of the license with a 40 percent paying (32 percent net) interest, acquiring one-half of ExxonMobil’s position.

ExxonMobil retains a 40 percent paying (32 percent net) interest, the Turkish Energy Company (TEC) its 20 percent paying (16 percent net) interest and the Kurdistan Regional Government its 20 percent carried interest.

Pending Government approval, DNO will drill an exploration well in the first half of 2018 with a second exploration well to follow on a separate structure.

The 324 square kilometer license is situated 60 kilometers west of Erbil and 20 kilometers east of Mosul. ExxonMobil had previously conducted extensive geological and geophysical studies and constructed a drilling pad before work was interrupted due to security conditions in the region.

The Baeshiqa license contains two large, undrilled structures which are expected to have multiple independent stacked target reservoir systems, including in the Cretaceous, Jurassic and Triassic.

DNO currently operates two other licenses in Kurdistan: one contains the Tawke and Peshkabir fields which together produce over 110,000 barrels of oil per day and the other the Benenan and Bastora heavy oil fields which are undergoing further appraisal and development. With three rigs currently deployed, the Company is the most active driller among the international operators in Kurdistan.

Bijan Mossavar-Rahmani (pictured), DNO’s Executive Chairman, said:

“We are pleased to partner with ExxonMobil, TEC and the Government on this exciting exploration opportunity.

“We bring to the project a 10-year record of successful and fast-track operations in Kurdistan, culminating in more than 200 million barrels produced to date.

“Following regularization of export payments and a landmark agreement with the Government to close out our historical receivables, our foot is back firmly on the accelerator.”

(Source: DNO)

Shares in Norway’s DNO ASA jumped 8.7 percent this morning following the announcement that the company has reached a “landmark settlement of outstanding receivables owed to the Company for past crude oil deliveries“, and the announcement of half-year revenues up 43 percent from the same period last year.

Under the settlement, DNO has been assigned the 20 percent interest in the Tawke license held by the Kurdistan Regional Government (KRG).

Following the settlement, DNO holds a 75 percent operated stake in the license containing the Tawke and Peshkabir fields with combined proven and probable reserves in excess of 500 million barrels and production in excess of 100,000 barrels of oil per day.

In addition to the 20 percent interest, the Company will receive three percent of gross license revenues each month from the Government over a five-year period. The settlement is effective as of 1 August 2017.

DNO has settled its claims for all outstanding Tawke license receivables from the Government and the Government has exercised its Tawke license audit rights to its satisfaction for the period up to the effective date and has no adjustment claims.

The Government has also discharged DNO from certain payment obligations including production bonuses, license fees and a USD 150 million water purification project that is no longer required by the Government.

The removal of these liabilities and the transfer to DNO of the 20 percent interest and the right to the three percent revenue stream will bolster the Company’s balance sheet and future cash flow.

Bijan Mossavar-Rahmani (pictured), DNO’s Executive Chairman, said:

“We are very pleased with the Government’s initiative to settle receivables and normalize export payments to the operators. This sends a strong positive signal to investors and helps restore confidence in Kurdistan’s oil sector.”

DNO’s June-July 2017 outstanding invoices for Kurdistan exports will continue to be paid under the payment arrangement in place since January 2016.

(Sources: DNO, Yahoo!)

DNO, the Norwegian oil and gas operator, today announced resumption of appraisal drilling at the Peshkabir discovery on the Tawke license in the Kurdistan region of Iraq following extended testing of the Cretaceous and Jurassic reservoirs in the Peshkabir-2 well.

The Company spud the Peshkabir-3 well on 8 July as part of a fast track field development plan including the acquisition and installation of an early production facility by yearend 2017 to be followed by a pipeline connection to the Tawke export terminal at Fish Khabur.

Three Cretaceous productive horizons (Upper Shiranish, Lower Shiranish and Qamchuqa) tested 3,800 barrels of oil per day (bopd), 4,000 bopd and 1,100 bopd, respectively, of 28o API gravity crude oil during a two-week cased hole testing program in May. The Cretaceous column in the Peshkabir-2 well is estimated to range between 380-590 meters.

Two productive horizons in the deeper Jurassic formation tested 2,665 bopd and 400 bopd, respectively, of 25o API gravity crude oil, again over a two-week cased hole testing program in April. The Jurassic column in the Peshkabir-2 well is estimated to range between 125-160 meters.

The well’s Lower Shiranish Cretaceous zone has been placed on production since late May at an average rate of 4,500 bopd, trucked to Fish Khabur some 12 kilometers away and commingled with Tawke production for pipeline export through Turkey.

Tawke license production from the two fields has averaged 115,000 bopd month-to-date in July.

“With 16 consecutive monthly export payments from the Kurdistan Regional Government in line with contractual entitlements, we’ve ramped up drilling with three rigs currently active across the portfolio,” said Bijan Mossavar-Rahmani, DNO’s Executive Chairman. “We’re particularly pleased about prospects at Peshkabir,” he added.

The Company holds a 55 percent working interest in and operates the Tawke license; Genel Energy plc holds a 25 percent interest and the Kurdistan Regional Government the remaining 20 percent interest.

(Source: DNO)

Shares in DNO ASA, the Norwegian oil and gas operator, were trading up 5 percent on Thursday morning after the company announced expanded investments, including doubling of planned 2017 wells at the Tawke field in the Kurdistan region of Iraq, on the back of strong first quarter results.

The Company reported quarterly net profit of USD 15 million, reversing a net loss of USD 31 million in the previous quarter. Revenues were up 83 percent to USD 77 million on operated production averaging 115,900 barrels of oil equivalent per day.

The expanded 2017 Tawke program includes eight new production wells, of which six are Cretaceous and two shallow Jeribe wells. A third drilling rig has been mobilized following receipt of regular payments for oil exports through Turkey. Year to date, the Company has been paid USD 122 million net, including USD 23 million towards DNO’s booked receivables for previous deliveries.

Elsewhere on the Tawke license, the Company produced an average of 3,000 barrels of oil per day from the Jurassic horizon of the recently drilled Peshkabir-2 well during a two-week test period in April. These volumes were trucked to DNO’s facilities at Fish Khabur and exported. Extended testing of the shallower Cretacous discovery in the Peshkabir-2 well has commenced. The Peshkabir-3 appraisal/production well will spud this summer.

The Company is preparing an accelerated development plan utilizing an early production facility to bring the Peshkabir field onstream by the end of this year.

In a separate release, the Company today announced a fast-track reentry into Norway with the acquisition of privately-held Origo Exploration Holding AS.

(Source: DNO)

DNO ASA, the Norwegian oil and gas operator, today announced a stepped up drilling campaign in the Kurdistan region of Iraq and the Sultanate of Oman on the back of 2016 operating profits and improved payments for exports from its flagship Tawke field in Kurdistan.

The Company also released its annual reserves report which showed an increase in combined proven and probable reserves (2P) and contingent resources (2C) following the new oil discovery at the Peshkabir field in Kurdistan.

DNO reported interim 2016 operating profits of USD 6 million, reversing an operating loss of USD 174 million in 2015. Following two years of cost cutting and asset rationalization, the Company is restarting investments to replenish its oil and gas reserves and restore production across its portfolio.

Planned 2017 capital investments are estimated at USD 100 million, and include four new production wells at Tawke. Elsewhere in Kurdistan, the Company plans to drill a third well at Peshkabir and an appraisal/production well at the Benenan field in the Erbil license. In Oman, two wells will be brought back onstream at Block 8 offshore with plans to nearly double output at the West Bukha and Bukha fields.

The Company is considering three additional wells at Tawke to raise production above current levels of around 115,000 barrels of oil per day (bopd) contingent on regular and predictable export payments from the Kurdistan Regional Government.

During 2016, DNO received ten payments totaling USD 210 million net to the Company for Tawke exports and outstanding receivables. Three additional payments totaling USD 59 million net to DNO have been received to date in the first quarter.

These payments create momentum as we move into 2017,” said DNO’s Executive Chairman Bijan Mossavar-Rahmani.

Early production from Peshkabir and transport of oil to the Company’s gathering, processing and export facilities at Fish Khabur 12 kilometers away is under assessment.

The Peshkabir field positions us for production and reserves growth in our Kurdistan portfolio,” said Mr. Mossavar-Rahmani, indicating that the Cretaceous discovery added 47.9 million barrels of oil equivalent (MMboe) of gross 2C resources.

As of 31 December 2016, DNO’s Company Working Interest (CWI) 2P reserves and 2C resources were estimated at 529.6 MMboe, up from 523.1 MMboe at year-end 2015. CWI 2P reserves were estimated at 368.3 MMboe, down from 391.5 MMboe at year-end 2015 after adjusting for CWI production of 25.3 MMboe during the year and a positive technical revision of 2.1 MMboe. CWI 2C resources were estimated at 161.3 MMboe, up from 131.6 MMboe at year-end 2015.

At Tawke, 2P reserves and 2C resources stood at 604.0 million barrels (MMbbls) at year-end 2016, down from 643.2 MMbbls at year-end 2015. Gross proven (1P) reserves stood at 347.7 MMbbls, down from 387.0 MMbbls at year-end 2015. Gross 2P reserves stood at 503.8 MMbbls, down from 543.0 MMbbls at year-end 2015. The reduction in each category reflected total production of 39.3 MMbbls from the field during the year.

International petroleum consultants DeGolyer and MacNaughton carried out the annual independent assessment of the Tawke field. DNO internally evaluated the remaining assets.

(Source: DNO)

Genel Energy plc notes that DNO ASA, as operator of the Tawke field (Genel 25% working interest), has today published updated estimates of Tawke field reserves.

At 31 December 2016, Tawke gross proved (1P) reserves are estimated by DNO ASA at 348 mmbbls, compared to 387 mmbbls at year-end 2015.

At 31 December 2016, gross proved plus probable (2P) reserves are estimated at 504 mmbbls, compared to 543 mmbbls at year-end 2015.

Tawke production in 2016 totalled 39 mmbbls.

At 31 December 2016, Tawke 2C contingent resources are estimated at 100mmbbls, unchanged from year-end 2015.

At the Peshkabir field, gross 2P reserves at 31 December 2016 stood at 32 mmbbls, all of which is located in the Jurassic reservoir, discovered in 2012. Peshkabir’s 2C resources at 31 December 2016 are estimated at 111 mmboe, of which 104 mmbbls is oil and 7 mmboe is gas. The Cretaceous discovery at the Peshkabir field, announced by the Tawke field partners in January 2017, added 48 mmboe of gross 2C resources, which is principally oil. At year-end 2015, Peshkabir’s gross 2C resources stood at 63 mmboe.

(Source: Genel Energy)

By John Lee.

Genel Energy has issued the following trading and operations update in advance of the Company’s full-year 2016 results, which are scheduled for release on 30 March 2017.

In the statement (see below), the company said it expects a significant drop in production in 2017. Share were trading down 11 percent on Tuesday.

The information shown below has not been audited and may be subject to further review:

Murat Özgül, Chief Executive of Genel, said:

“2016 was a major step forward for the monetisation of oil exports from the Kurdistan Region of Iraq. We received $207 million in cash proceeds for oil sales and receivable recovery. These payments in turn allowed for work programmes to resume at Taq Taq and Tawke. The KRG has confirmed that payments will continue, allowing us to plan with confidence for 2017.”

 2016 PRODUCTION AND CURRENT PERFORMANCE

  • 2016 net production averaged 53,300 bopd. Production and sales by field for 2016 were as follows:

  • During 2016, Taq Taq natural field declines were partially offset by the three development sidetracks drilled and completed during the year. Taq Taq has averaged 35,300 bopd in January 2017 to date. A total of 18 wells are currently producing, with five of these wells accounting for c.80% of field production. Taq Taq field water production is currently 12,500 bopd, representing a water cut of 27%, significantly less than total water handling capacity of 55,000 bopd
  • Good progress is being made on the updated Field Development Plan and Competent Person’s Report for Taq Taq. Both are on track for completion in Q1 2017
  • At Tawke, the 2016 development programme helped offset natural well decline at the field. Tawke has averaged 113,900 bopd in January 2017 to date
  • Net production to Genel from Taq Taq and Tawke has averaged 44,000 bopd in January 2017 to date

FINANCIAL PERFORMANCE

  • $207 million cash proceeds (pre capacity building payments) were received in 2016, of which:
    • $153 million against 2016 sales
    • $24 million relates to the January 2016 payment for December 2015 sales
    • $30 million relates to the recovery of historical receivables
  • A total of $210 million was invoiced for 2016 sales, with almost all of the difference between this figure and the $153 million above representing amounts owed by the Kurdistan Regional Government (‘KRG’) for Q4 2016
  • In January 2017 the Tawke partners received a payment of $39 million related to October 2016 exports. Genel’s share of this amount is not included in end-2016 unrestricted cash balances
  • Capital expenditure for 2016 totalled $61 million, below the $90-110 million guidance range, as previously communicated
  • Similar to the process which occurred at the start of 2016, the Company is currently in discussions with the KRG regarding the pricing mechanism for crude sales from Taq Taq and Tawke, as well as the proxy formula used by the KRG to calculate payments for current sales from Taq Taq and Tawke
  • The carrying value of the receivable for unpaid production will be tested for impairment as part of the end-2016 results process, taking into account the latest views on historical netbacks, timing of recovery, future oil prices, and the production outlook at Taq Taq and Tawke
  • Unrestricted cash balances at 31 December 2016 stood at $408 million ($405 million at 30 September 2016)
  • Net debt at 31 December 2016 stood at $240 million ($241 million at 30 September 2016)

2017 ACTIVITY

Kurdistan Region of Iraq

  • KRI oil production assets
    • At Taq Taq (Genel 44% working interest, joint operator), the firm 2017 work programme consists of a workover of the TT-07z well and a new appraisal well, TT-29, in the north of the field. Both activities will be undertaken by a 1,500 bhp rig which is expected to be on location in February 2017. Additional activity, including further Cretaceous sidetracks, Cretaceous and Pilaspi development wells and installation of Electric Submersible Pumps in existing wells is contingent on regular and predictable export payments from the KRG for Taq Taq sales as well as partner approval. The Company expects production from the Taq Taq field to average 24-31,000 bopd in 2017
    • At Tawke (Genel 25% working interest), the operator DNO ASA expects production from the field to remain stable at the current rate of 115,000 bopd in 2017, based on expected investment levels
  • KRI gas assets (Miran 75% operated interest and Bina Bawi 80% operated interest)
    • The pre-FEED and upstream Gas Development Plan studies for the Miran and Bina Bawi gas fields are expected to complete shortly
    • Firm 2017 activity is expected to be largely technical and commercial in nature, with a strategy to enhance the value of the KRI gas project. In the event of a successful farm-out, contingent activity could take the form of the environmental and social impact assessment and FEED for the gas treatment and processing facilities, as well as extended well tests and further 3D seismic on the Bina Bawi licence
    • Discussions are ongoing with the KRG relating to the finalisation of the PSC amendments and gas lifting agreement. Efforts are also continuing in order to bring in partners to the KRI gas assets through a farm-down of the Miran and Bina Bawi licences
    • At end-2015, the carrying value of the Miran and Bina Bawi fields in the Company’s accounts was $1,427 million. The carrying value of the Miran and Bina Bawi fields will be tested for impairment as part of the end-2016 results process. Taking into account the latest views on discount rates and financing options, amongst other factors, management expects to record a material impairment of the carrying value in its 2016 accounts
  • KRI exploration and appraisal
    • As announced on 9 January 2017, the Peshkabir-2 well on the Tawke PSC flowed 3,800 bopd of 28° API oil from Cretaceous reservoirs in the southern flank of the Peshkabir field. The well, currently drilling ahead of schedule and under budget, is expected to reach total depth of 3,500 metres and will be completed, following evaluation of the Jurassic, by early February. The Tawke partners are considering a number of options to step up the appraisal of the new discovery, as well as the potential for early Peshkabir production via the existing Tawke facilities
    • In January 2017, the Company signed a Sales and Purchase Agreement to transfer its 40% interest in the Chia Surkh licence to its partner, Petoil, subject to approval by the Ministry of Natural Resources. Petoil will pay Genel an initial consideration of $2 million, and an additional $25 million in staged payments contingent on future crude oil production from the Chia Surkh licence. Genel will recognise an impairment of the Chia Surkh carrying value of $198 million in its 2016 accounts
    • The Company has formally relinquished its 40% interest in the Dohuk licence. The relinquishment of the 40% operated interest in the Ber Bahr licence is awaiting final approval from the KRG

Africa

  • The Company is currently in discussions with the Moroccan government over the nature, scope, and timing of the activity related to the maximum future exploration commitment of c.$30 million
  • Onshore Somaliland, the acquisition of 2D seismic data on the Odewayne (Genel 50%, operator) and SL-10B/13 (Genel 75%, operator) blocks is due to commence by March 2017. The data will be acquired as part of a Somaliland government owned speculative 2D seismic acquisition project, with the Company purchasing the associated data from the government

2017 OUTLOOK AND GUIDANCE

  • Company production guidance for 2017 is set at 35-43,000 bopd. This assumes the delivery of the Taq Taq work programme as stated above and a prudent level of contingency with respect to the Tawke operator’s current 2017 production expectation. The work programmes at Taq Taq and Tawke are subject to change depending on the results of development drilling and payments from the KRG for current sales and receivable recovery
  • Capital expenditure, net to Genel, at the Taq Taq and Tawke fields in 2017 is forecast at $50-75 million. Expenditure on the KRI gas business is estimated at $10 million. Capex on the 2017 Africa exploration programme is estimated at $40 million, which includes the c.$30 million Morocco exploration expense mentioned above
  • 2017 operating expenditure, net to Genel, at the Taq Taq and Tawke fields is estimated at $30-35 million

(Source: Genel Energy)

DNO ASA, the Norwegian oil and gas operator, has announced that the Peshkabir-2 well currently drilling in the Kurdistan region of Iraq has discovered oil in the Cretaceous horizon in the southern flank of the Peshkabir field.

The well flowed at a stable rate of 3,800 barrels of 28° API oil per day on a 52/64 choke from an open hole test of a 170-meter interval. Pressure data supported by observations of oil shows from cuttings and side wall cores indicate a Cretaceous oil interval in excess of 300 meters.

Peshkabir-2 was spudded last October to explore the Cretaceous horizon and appraise the previously tested deeper Jurassic reservoir on a 2012 discovery 18 kilometers to the west of the company’s flagship Tawke field.

Following acquisition of new 3-D seismic, Peshkabir-2 was originally planned for 2015 but delayed following the drop in world oil prices and interruption in payments for the company’s production and exports from Kurdistan.

The well, currently drilling ahead of schedule and under budget, is expected to reach total depth of 3,500 meters and will be completed in the Jurassic by early February. Pre-spud estimates for drilling, open hole testing of the Cretaceous and completion stood at USD 17.5 million.

DNO is considering a number of options to step up appraisal of the new Cretaceous discovery including a geological side-track in the central part of the Peshkabir structure or a third well. Options are also under consideration for possible early Peshkabir production and trucking to the company’s gathering, processing and export facilities at Fish Khabur some 12 kilometers away.

Bijan Mossavar-Rahmani (pictured), Executive Chairman of DNO, said:

“We are very encouraged by what we have seen so far in this well … Certainly our subsurface and drilling teams have started the year on the right foot.”

The company will provide an update on the resource potential of both the Cretaceous and Jurassic horizons following post-well evaluation of all data acquired during Peshkabir-2 operations.

DNO operates and holds a 55 percent working interest in the Tawke license which holds the Peshkabir field. Genel Energy plc and the Kurdistan Regional Government hold a 25 percent and 20 percent interest, respectively.

(Source: DNO)