DNO ASA, the Norwegian oil and gas operator, today reported stepped up investments across its portfolio on the back of higher production and significantly improved liquidity outlook as the Company recovers from the oil market turmoil that upended the second quarter of 2020.

Operated production in July at the Company’s flagship Tawke license in the Kurdistan region of Iraq is up 15,000 barrels of oil per day (bopd) month-on-month to 115,000 bopd following a well intervention campaign fast tracked in June with the stabilization of oil prices and improved export payment terms.

In the North Sea segment, DNO projects receipt of USD 215 million in tax refunds in the second half of the year, including USD 70 million from the recently announced temporary changes to petroleum taxation in Norway.

“The worst of the coronavirus pandemic hit to our business is behind us and DNO is back identifying and capturing opportunities,” said Bijan Mossavar-Rahmani, DNO’s Executive Chairman. “Still, we are prepared to act quickly, as we did in March, if a strong second wave comes,” he added.

Second quarter Company Working Interest (CWI) production stood at 89,700 barrels of oil equivalent per day (boepd) of which Kurdistan contributed 71,900 bopd and the North Sea 17,800 boepd.

Gross operated Tawke license production averaged 102,000 bopd, including 58,100 bopd from the Tawke field and 43,900 bopd from the Peshkabir field, together down 11 percent from the first quarter as development activity dropped off to preserve cash at a time of historically low and uncertain oil prices.

Second quarter revenues slid to USD 72 million and operating losses climbed to USD 81 million, both driven by weak commodity prices across the portfolio and lower cargo liftings of produced oil in the North Sea.

At the Baeshiqa license in Kurdistan, DNO continued drilling the third exploration well on a second structure (Zartik) some 15 kilometers southeast of the Baeshiqa-2 discovery well. The rig has been released and testing will commence in August in Lower Jurassic and Upper Triassic zones intersected by the well and expected to last three months. Evaluation of the Baeshiqa-2 results is ongoing to determine commerciality.

During the first half of 2020 DNO received a total of USD 224 million in payments from the Kurdistan Regional Government. In addition, the Company received a USD 23 million June entitlement payment after the end of the reporting period. Discussions are ongoing to reach an agreement on acceptable terms and timing of payment of arrears totaling USD 240 million due to DNO for the November 2019-February 2020 entitlements and November 2019-June 2020 override payments.

Notwithstanding the interruption of these payments and DNO’s repayment of the remaining USD 138.5 million of the DNO01 bond at maturity on 18 June 2020, the Company exited the first half of 2020 with a strong cash balance of USD 427 million. Net debt at the end of the second quarter stood at USD 537 million, down from USD 559 million at the end of the first quarter.

Last month, DNO commissioned the Peshkabir-to-Tawke gas reinjection project, the first enhanced oil recovery project in Kurdistan, to unlock additional oil volumes at Tawke while significantly reducing gas flaring and CO2 discharges at Peshkabir.

Prompted by the tax changes in Norway, the Company is working with partners to accelerate infill drilling at the Ula, Tambar and Brage producing fields, revisit development options for the Brasse field and actively evaluate the Iris/Hades, Fogelberg and Trym South discoveries.

DNO will remain an active explorer in the North Sea, targeting 4-6 wildcat wells a year.

(Source: DNO)

By John Lee.

The Government of Norway has donated NOK 20 million (approximately US$ 2 million) in support of the UNFPA humanitarian programme on gender-based violence across in Iraq.

This contribution is part of a wider NOK 100 million contribution from Norway to UNFPA’s Global Humanitarian Action Overview aiming at mitigating, preventing and responding to gender-based violence in humanitarian crises.

In Iraq, UNFPA will utilise the funding for strengthening the capacity of service providers in case management, psychosocial support and mental health and psychosocial support targeting the vulnerable population across Iraq.

The funding will contribute to supporting the current 47 women centres operating in camps and non-camps settings. UNFPA will use this grant to procure dignity kits and the specific kits for the clinical management of rape following the roll-out of the clinic management of rape protocol later in the year.

Dr. Oluremi Sogunro (pictured), UNFPA Representative to Iraq, said:

“Norway is a long-standing contributing partner to the humanitarian crisis in Iraq. We are extremely grateful for the renewed trust in our interventions and programmes. The new contribution will be pivotal for our efforts in responding to the needs of gender-based violence survivors in camps across Iraq, focusing on their mental health and the psychosocial support they deserve.”

UNFPA, the United Nations Population Fund, delivers a world where every pregnancy is wanted, every childbirth is safe and every young person’s potential is fulfilled.

(Source: UNFPA)

DNO ASA, the Norwegian oil and gas operator, has reported that it had identified and implemented 2020 budget cuts of USD 350 million or 35 percent across all spend categories as the Company moved early and quickly to protect its personnel and operations and preserve its cash position in response to the the devastating impact of the coronavirus pandemic.

The Company exited the first quarter of 2020 with a cash balance of USD 543 million, up from USD 486 million at yearend 2019.

In releasing its interim first quarter results, DNO reported revenues of USD 206 million largely driven by lower oil prices and a net loss of USD 40 million on the back of impairments of its North Sea assets, again driven by lower oil prices. Notwithstanding the turmoil in the oil industry, DNO delivered strong operational metrics with production split 80:20 between the Kurdistan region of Iraq and the North Sea.

DNO’s Company Working Interest (CWI) production averaged 99,857 barrels of oil equivalent per day (boepd) in the quarter, of which Kurdistan contributed 81,221 barrels of oil per day (bopd) and the North Sea 18,636 boepd.  Gross production at the DNO-operated Tawke and Peshkabir fields averaged 61,493 barrels and 53,714 bopd, respectively, as DNO hit the brakes on spending.

After completing five development wells in the license during the quarter, DNO released four drilling rigs in Kurdistan but continues to utilize the Company-operated workover rig to service production wells, some of which have been shut in given current oil prices and payment delays. A drilling rig has been cold stacked at each field and can quickly be mobilized if conditions warrant.

The Company has had recent successes with the drill bit. In the North Sea, the Bergknapp exploration well (DNO 30 percent) discovered hydrocarbons in multiple formations of poor to good reservoir quality with recoverable resources ranging 26-97 million barrels of oil equivalent (MMboe); the near-field discovery is Norway’s largest to date in 2020 and with high probability of commerciality.

In Kurdistan, the Company has reported a discovery in its operated Baeshiqa-2 exploration well after flowing variable rates of light oil and sour gas to surface from three Triassic aged reservoirs. Evaluation of test results will determine next steps towards further appraisal and assessment of commerciality. Additionally, a third well on the license will spud mid-month, with its primary target a shallower Jurassic formation on a separate structure (Zartik).

Meanwhile, the Peshkabir-to-Tawke gas capture, transport and reinjection project to effectively end CO2 emissions at Peshkabir (and therefore in DNO’s Kurdistan operations) and boost oil recovery at Tawke is completed and undergoing commissioning.

To achieve budget reductions, DNO has deferred most discretionary drilling and capital projects across the portfolio and continues to identify and capture cost savings. In the United Kingdom, no drilling is planned and the balance of the Schooner and Ketch decommissioning program has been suspended and deferred to 2021/2022. The Company has renegotiated service contracts for savings and extended payment terms where it operates, and is in continuous discussions with partners in the North Sea to reduce operating and other costs and defer non-critical projects where it does not operate. DNO’s 2020 North Sea drilling campaign has been scaled back and wells deferred, but firm plans remain in place for wells in five licenses over the balance of the year, including two exploration, one appraisal, two infill and two development/geopilot wells.

To further strengthen its cash position, the Company has also drawn USD 115 million from its reserve-based lending facility to fund North Sea operations and has suspended its dividend program.

Last month, DNO received USD 90 million for Kurdistan oil exports, not included in the end of first quarter cash balances. Entitlement and override payments for November 2019 through February 2020 (total USD 233 million) remain outstanding, which the Kurdistan Regional Government has proposed to defer together with override payments commencing March 2020, given the deterioration of its own fiscal position with the collapse in oil prices. DNO is following up to agree acceptable terms for such deferment and also timing of payments of the sums in arrears.

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

“One of the first to hit the brakes, DNO is positioned to be one of the first to press down on the accelerator with signs of sustained market recovery, notably through short-cycle drilling in Kurdistan.

“Lifting costs below USD 5 per barrel in Kurdistan give DNO competitive advantage when oil prices are weak and strong cash flow when oil prices recover.”

(Source: DNO)

DNO ASA, the Norwegian oil and gas operator, has announced completion of testing and appraisal of the Baeshiqa-2 exploration well in the Kurdistan Region of Iraq and the imminent spud of an exploration well on a separate prospect, Zartik, located 15 kilometers southeast on the same license.

The testing has proven oil and gas in three separate Triassic aged reservoirs. Evaluation of the test results will determine next steps towards further appraisal and assessment of commerciality.

As previously reported, in November 2019 DNO issued a notice of discovery to the government that hydrocarbons had been flowed to surface from the upper part of Triassic Kurra Chine B reservoir during first phase of testing. The reservoir produced between 900 and 3,500 barrels of oil per day (bopd) with specific gravity ranging between 40o and 52o API and sour gas between 8.5 to 15 million standard cubic feet per day (MMcfd).

Following a workover and acid stimulation, testing resumed in March 2020 in three other separate Triassic aged reservoirs with each flowing variable rates of light oil and sour gas, too.

During the second phase of testing, the lower Kurra Chine B reservoir produced between 600 to 3,500 bopd with specific gravity ranging between 47o and 55o API and sour gas between 4 to18 MMcfd. The test demonstrated that the upper and lower Kurra Chine B reservoirs are in communication, proving a hydrocarbon-bearing reservoir interval of around 150 meters.

The Kurra Chine A reservoir flowed between 950 to 3,100 bopd of 30o to 34o API and sour gas ranging from 1.8 to 3.6 MMcfd from a hydrocarbon-bearing reservoir interval of 70 meters.

The Kurra Chine C reservoir was the deepest encountered in the well covering only 34 meters of what is expected to be a thicker reservoir of around 200 meters. The drilled interval has been exposed to significant fracture damage due to the pumping of lost circulation material. The reservoir produced between 200 to 1,200 bopd of 52o API gravity and sour gas between 3.8 to 6 MMcfd.

Shallower Jurassic aged reservoirs were encountered during drilling and tested. However, the tested zones were not acid stimulated, and the results are inconclusive. The well was spud in February 2019 and drilled to a total depth of 3,204 meters (2,549 meters TVDSS), encountering almost a kilometer of fractured carbonates with poor to good oil shows. Baeshiqa-2 well was drilled safely, below budget and with all exploration objectives achieved.

The Zartik-1 well is anticipated to spud on 15 May 2020. Site construction was completed ten days ago on time and below budget.

DNO acquired a 32 percent interest and operatorship of the Baeshiqa license in 2017. Partners include ExxonMobil with 32 percent, Turkish Energy Company (TEC) with 16 percent and the Kurdistan Regional Government with 20 percent.

(Source: DNO)

DNO ASA, the Norwegian oil and gas operator, today announced a 30 percent or USD 300 million reduction in its 2020 budget to shore up its balance sheet in the face of unprecedented market convulsions and plunging oil prices triggered by the coronavirus pandemic.

Steps have already been taken to suspend most discretionary drilling and capital projects across the Company’s portfolio and to focus instead on key projects in its core operating area in the Kurdistan region of Iraq.

The Company has also initiated staff reductions, cancelled the first half 2020 dividend, discussed modalities for cost reductions with its suppliers and contractors and frozen new ventures.

“We demonstrated our resilience and nimbleness during the regional geopolitical pandemonium triggered by ISIS some five years ago and can ramp up operations quickly once the coronavirus is put back in the bottle,” said Bijan Mossavar-Rahmani, DNO’s Executive Chairman.

Meanwhile, among the Company’s priorities is completion of testing of the Baeshiqa-2 exploration well in Kurdistan starting late March. The Company previously reported that the well flowed light oil and sour gas to surface and that testing of remaining reservoirs would resume following a well workover program, now completed, to assess commerciality.

DNO also remains committed to complete its USD 100 million Peshkabir-to-Tawke gas capture, transport and reinjection project in Kurdistan to reduce CO2 emissions at the Peshkabir field and boost oil recovery at the Tawke field. Gas reinjection will commence in early April.

But the Company’s exploration, appraisal and development drilling campaign, historically the most active among the international oil companies in Kurdistan, has been scaled back, as both DNO and contractor staff movements and rotations have been impacted by border closings, quarantines and other coronavirus travel restrictions.

By the end of March, the number of active drilling rigs deployed by DNO in Kurdistan will drop to two (including one workover rig) from six (two workover rigs) at the beginning of the year. Production at the Tawke and Peshkabir fields has already started to slide to below 115,000 barrels of oil per day.

DNO’s ability to maintain its level of spending has also been strained by interruptions and delays to monthly payments for its oil exports from Kurdistan; the last payment received in January covered September 2019 exports.

“We have every confidence that payments will be forthcoming from Kurdistan, as they always have, but timing and regularity will drive our ability, and that of other companies, to plan and execute investments necessary to grow, even maintain, oil production,” Mr. Mossavar-Rahmani said.

The Company will suspend guidance, including on production, until it has more visibility on the course of the pandemic and the direct and indirect impact on DNO’s operations and financial position.

The Board of Directors, in light of oil market turmoil and uncertainty, has decided not to make use of the authorization granted at the 2019 Annual General Meeting to pay dividends for first half 2020 but remains committed to the program and at the next shareholder meeting will request authorization to resume dividend distributions once circumstances permit.

The Company today also released its 2019 Annual Report and Accounts and 2019 Annual Statement of Reserves and Resources.

DNO had a record year in 2019 with annual revenues of USD 971 million, up 17 percent from year earlier levels, Company Working Interest (CWI) production up 28 percent year-on-year to a record 104,800 barrels of oil equivalent per day (boepd) and the largest drilling program in the Company’s 48-year history. Notwithstanding strong underlying performance, 2019 results were impacted by non-recurring items as well as lower oil prices and increased exploration expenses resulting in operating profit of USD 76 million.

Yearend 2019 CWI proven and probable (2P) reserves stood at 345 million barrels of oil equivalent (MMboe) down from 376 MMboe at yearend 2018 after adjusting for production during the year and technical revisions, offset partly by reserves added through the acquisition of Faroe Petroleum plc in 2019.  Proven (1P) reserves stood at 206 MMboe and proven, probable and possible (3P) reserves at 540 MMboe.

On a gross basis, at the Tawke license in the Kurdistan region of Iraq containing the Tawke and Peshkabir fields, yearend 2019 2P reserves stood at 400 million barrels (MMbls) (502 MMbbls in 2018), of which 1P reserves represented 228 MMbbls. Gross 3P reserves stood at 641 MMbbls.

Broken down by field, Tawke field gross 2P reserves at the Tawke field stood at 284 MMbbls (376 MMbbls in 2018) after adjusting for 2019 production of 25 MMbbls and a downward technical revision of 67 MMbbls; of the total remaining 2P reserves, gross 1P reserves represented 176 MMbbls.  Gross 3P reserves at yearend 2019 stood at 421 MMbbls. At the Peshkabir field, gross 2P reserves stood at 116 MMbbls at yearend 2019 (126 MMbbls in 2018) of which gross 1P reserves represented 51 MMbbls.  Gross 3P reserves stood at 220 MMbbls.

Across its North Sea portfolio at yearend 2019 (87 licenses in Norway and 12 in the United Kingdom), on a CWI basis, DNO’s 2P reserves stood at 70 MMboe (1P reserves of 49 MMboe, 3P reserves of 102 MMboe and 2C resources of 149 MMboe).

The 2019 Annual Report and Accounts, the 2019 Country-by-Country Report  and the 2019 Annual Statement of Reserves and Resources are attached and also available on the Company’s website www.dno.no.

(Source: DNO)

DNO ASA, the Norwegian oil and gas operator, today reported interim 2019 revenues of USD 971 million, the highest in the Company’s 48-year history, on the back of acquisitions and a record drilling campaign driving a 28 percent year-on-year increase in Company Working Interest (CWI) production to 104,800 barrels of oil equivalent per day (boepd). Net profit last year stood at USD 74 million.

The Company exited 2019 with a cash balance of USD 486 million and USD 145 million in marketable securities.  The cash balance excludes two delayed export payments totaling USD 107 million net to DNO received from the Kurdistan Regional Government in 2020.

In January 2020, DNO completed a buyback program of up to 10 percent of own shares, having acquired 108,381,415 shares at a weighted average price of NOK 10.61 per share (for a total cost of USD 129 million). The Board of Directors has called for an Extraordinary General Meeting later this month to seek shareholder approval to cancel the treasury shares.

The Board of Directors also plans to approve distribution of the next semi-annual dividend of NOK 0.20 per share in March 2020, following which DNO will have returned USD 200 million to shareholders since August 2018.

Last year, the Company delivered its largest ever annual drilling program with 36 wells drilled or spudded across its portfolio, of which 24 were development/infill and 12 exploration/appraisal wells. Planned operational spend (capital and exploration expenditures plus lifting costs) will remain high in 2020 at USD 650 million.

In Kurdistan, gross production from the two fields in the DNO-operated Tawke license climbed to 124,000 barrels of oil per day (bopd) in 2019 (87,400 bopd CWI), up from 113,100 bopd in 2018 (79,700 bopd CWI). Average production of 122,800 bopd in the fourth quarter of 2019 was up 3,000 bopd from the previous quarter. In November 2019, the Company reported a discovery in its operated Baeshiqa license, with the well now undergoing a workover prior to resumption of acid stimulation and testing of remaining reservoirs to assess commerciality.

Through acquisition of Faroe Petroleum plc, the Company added North Sea production of 17,400 boepd in 2019. Average production of 19,000 boepd in the fourth quarter of 2019 was up 4,100 boepd from the previous quarter. The Company was awarded 10 licenses in Norway’s Awards in Predefined Areas (APA) 2019 licensing round adding to the 87 licenses already held in Norway and 15 across the United Kingdom, the Netherlands and Ireland. Of these licenses, 28 are on production (13 fields) and the balance in various stages of evaluation, exploration and development.

The Peshkabir-to-Tawke gas gathering and reinjection project designed to increase oil recovery rates at Tawke while eliminating flaring at Peshkabir will be completed in spring 2020. Once completed, CO2 emissions from DNO’s operated Kurdistan fields are expected to drop to around 7 kilograms per barrel, compared to an industry average of about 9 kilograms per barrel in Norway and about 18 kilograms per barrel globally.

(Source: DNO)

The Ambassadors of Canada, Croatia, Czech Republic, Finland, France, Germany, Hungary, Italy, the Netherlands, Norway, Poland, Romania, Spain, Sweden, the United Kingdom and the United States condemn the excessive and lethal use of force by Iraqi security forces and armed groups since 24 January against peaceful protestors, including in Baghdad, Nasiriya and Basra.

Despite assurances by the government, security forces and armed groups continue to use live fire in these locations, resulting in multiple deaths and injuries of civilians, while some protestors face intimidation and abduction.

The Ambassadors call on the government to respect freedoms of assembly and the right to protest peacefully, as enshrined in Iraq’s constitution, and on all protestors to maintain the peaceful nature of the movement.

The Ambassadors call on the government to guarantee credible investigations and accountability for the over 500 deaths and thousands of injuries of protesters since 1 October.

(Source: British Embassy)

DNO ASA, the Norwegian oil and gas operator, today announced a 29 percent year-on-year increase in its net Company Working Interest (CWI) production in 2019 to 104,800 barrels of oil equivalent per day (boepd) on the back of acquisitions and a record drilling campaign.

In the Kurdistan region of Iraq, production from the two fields in the Tawke license climbed from 113,100 barrels of oil per day (bopd) in 2018 (79,700 bopd CWI) to 124,000 bopd in 2019 (87,400 bopd CWI). Production of 122,800 bopd in the fourth quarter of 2019 was up 3,000 bopd from the previous quarter. The Company is operator of the Tawke license with a 75 percent interest.

At Tawke, 2019 production stood at 68,800 bopd, with wells drilled last year contributing 13 percent of field production at yearend. At Peshkabir, 2019 production stood at 55,200 bopd, with wells drilled in 2019 contributing 40 percent of field production at yearend.

Even though Tawke is now a mature field, we are continuously finding ways to slow its decline while teasing additional production from the newer Peshkabir field, all the while probing for other opportunities in Kurdistan,” said DNO’s Executive Chairman Bijan Mossavar-Rahmani.

Elsewhere in Kurdistan, DNO reported a discovery in the Baeshiqa-2 exploration well last November after flowing variable rates of light oil and sour gas to surface from the upper part of Triassic Kurra Chine B reservoir following acid stimulation. Further testing of this and several other Jurassic and Triassic zones will determine the next steps towards appraisal and assessment of commerciality. DNO holds a 32 percent interest and operatorship of the Baeshiqa license.

Meanwhile, the Peshkabir-to-Tawke gas injection project designed to increase oil recovery rates at Tawke while eliminating flaring at Peshkabir will be completed in March 2020. Once completed, CO2 emissions from DNO’s operated fields will average 7 kilograms per barrel of oil equivalent (boe) produced, compared to an average of 9 kilograms per boe on the Norwegian Continental Shelf and a global average of 18 kilograms per boe.

DNO retained a strong cash balance of USD 480 million at yearend 2019 plus USD 144 million in marketable securities. Following a delay in export payments last month from the Kurdistan Regional Government to oil operators, DNO has since yearend received payment for its August oil sales totaling USD 52 million net to the Company.

(Source: DNO)

“We had to run quickly: they were coming in at us. We could hear them from far. My whole life crumbled that same moment. I froze but I could hear my sister screaming: “move or they will kill you, or worse take you,” said Minar from Qamishli, in Syria, recollecting the moment she and her family had to flee their home in Syria and seek refuge in the Kurdistan Region of Iraq.

To protect girls like Minar and ensure that no woman suffers or dies from gender-based violence in Iraq, the Government of Norway contributed to NOK 17 million (US$ 1,872,452 million) to UNFPA interventions aiming at mitigating, preventing and responding to gender-based violence in humanitarian crisis.

This contribution is part of the Government of Norway’s agreement to provide funding against the appeals in different countries including Iraq for a total amount of (approximately US$ 12,344,685 million) NOK 111.5 Million and (approximately US$ 2,7 million) NOK 25 million to the Humanitarian Thematic Fund. Norway is the top donor to UNFPA core resources in 2019.

In Iraq, UNFPA will utilise the funding to build the capacity of GBV actors, to prevent and respond to GBV through quality services provision targeting vulnerable survivors, including refugees, IDPs, returnees and host communities. Norway’s contribution will also support UNFPA’s efforts to strengthen policies and the legal framework on gender-based violence, as well as to change behaviours towards survivors of GBV.

“Protection against sexual and gender based violence and empowerment of women and girls is a top priority in Norway’s humanitarian efforts. UNFPA is a trusted partner in this work”, says Tone Allers, the Norwegian Ambassador to Jordan and Iraq.

On his end, Dr Oluremi Sogunro, UNFPA Representative to Iraq, thanks the Government of Norway, for their continuous support to the Fund’s GBV programmes. “Norway has been a steady partner to UNFPA throughout the humanitarian crises that hit Iraq. I thank the Government of Norway for leaving no woman and girl behind by renewing its trust in our gender-based violence programmes. Together, we will ensure that women and girls across Iraq are protected and are given the opportunity to thrive.”

(Source: UN)

DNO ASA, the Norwegian oil and gas operator, today announced issuance of a notice of discovery to the Kurdistan Regional Government of Iraq on the Baeshiqa-2 exploration well, in accordance with the requirements of the Production Sharing Contract, after flowing hydrocarbons to surface from the upper part of Triassic Kurra Chine B reservoir.

Following acid stimulation, the zone flowed variable rates of light oil and sour gas. Further testing of this and other Jurassic and Triassic zones is ongoing and will determine the next steps towards appraisal and assessment of commerciality.

The Baeshiqa-2 well was spud in February 2019 and drilled to a total depth of 3,204 meters (2,549 meters TVDSS).

DNO acquired a 32 percent interest and operatorship of the Baeshiqa license in 2017. Partners include ExxonMobil with 32 percent, Turkish Energy Company (TEC) with 16 percent and the Kurdistan Regional Government (KRG) with 20 percent.

(Source: DNO)