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.

DNO ASA, the Norwegian oil and gas operator, today provided production and spend guidance for the balance of the year ahead of its Annual General Meeting on Wednesday.

The Company reported that it has implemented the target 35 percent reductions across all spend categories to shrink its 2020 budget by USD 350 million to USD 640 million in response to turbulence and uncertainty in global oil and financial markets triggered by the coronavirus pandemic.

While strengthening its balance sheet, cutbacks in spend will throttle back 2020 Company Working Interest (CWI) production to a projected 88,000 barrels of oil equivalent per day (boepd), of which the Kurdistan region of Iraq will contribute 71,000 barrels of oil per day (bopd) and the North Sea 17,000 boepd. DNO’s CWI production averaged 104,800 boepd last year.

In Kurdistan, DNO has reduced the number of rigs deployed in drilling, testing and workovers from five in 2019 and early 2020 to two; these two rigs are believed to be the only ones currently active in Kurdistan, down from an overall count approaching 20 last summer.

Of the two active rigs, one is drilling the Zartik-1 exploration well on the DNO-operated Baeshiqa license and the other is a Tawke license workover rig that will shortly be moved for scheduled maintenance. However, two third-party rigs have been warm stacked at the Tawke and Peshkabir fields and can quickly be mobilized if oil prices climb and export payments are regularized.

“Our cost cutbacks have been thoughtful and deliberate as we moved at warp speed to preserve cash and our balance sheet,” said Bijan Mossavar-Rahmani, DNO’s Executive Chairman. “The resulting reductions in oil production especially in Kurdistan are reversible with a restart of drilling,” he added. “We have not lost reserves but simply parked a portion until the market recovers. And it will.”

Gross production at the DNO-operated Tawke license in the Kurdistan region of Iraq containing the Tawke and Peshkabir fields, absent drilling of new infill wells to arrest natural field decline, is expected to average 100,000 bopd in 2020. This reflects a drop from 115,210 bopd in Q1 2020 to 100,000 bopd in Q2 2020 and 90,000 bopd over the balance of the year. The Tawke license exit rate at yearend 2020 is projected at 85,000 bopd absent new wells. Production continues to be split 55-45 between the Tawke and Peshkabir fields.

On a CWI basis, DNO’s production in Kurdistan in the second half of the year is projected to average 65,000 bopd (81,220 bopd in Q1 2020 and an estimated 70,000 bopd in Q2 2020). CWI in North Sea operations will contribute another 17,000 boepd in the second half of 2020 (18,640 boepd in Q1 2020 and an estimated 17,000 boepd in Q2 2020).

Budget cuts and the newly announced Norwegian production caps are not expected to make a material change to DNO’s 2020 North Sea projections; the majority of the Company’s fields subject to the restrictions are not fully utilizing their previous higher production permits.

DNO ASA 2020 Projected Spend
Q1 2020 Q2 2020 Q3+Q4 2020 2020 2019
Actual Projected Projected Projected Actual
USD million USD million USD million USD million USD million
Exploration expenditures 34 36 65 135 187
Capital expenditures 78 37 40 155 339
Operating expenditures 59 49 92 200 237
Abandonment expenditures 17 7 7 31 23
Operational spend 187 129 204 520 786
Other 40 34 46 120 203
TOTAL 227 163 250 640 989

Note: Figures above are pre-tax (i.e., before exploration tax refund in Norway). The category
“Other” includes general and administrative expenditures (G&A), net interest payments and

(Source: DNO)

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)

Genel Energy plc has updated its oil reserves and resources across its portfolio.

Bill Higgs (pictured), Chief Executive of Genel, said:

Genel’s producing assets are profitable even at an oil price of $30/bbl and this, coupled with our robust balance sheet, supports investment in growth and the payment of a material dividend. The reduction of reserves at Tawke largely relates to production towards the end of the life of the field, and consequently our mid-term production outlook is materially unchanged and there is no reserves impact on our business plan.

“Our production funds an approved but flexible capital programme that, in the right market conditions, enables us to drill the wells necessary to evaluate the potential to convert the 2C oil resources in our portfolio, validated for the first time by ERCE, into reserves and production, boosting our cash generation potential.

Net oil reserves (MMbbls) 1P 2P 3P
31 December 2018 99.3 154.9 219.3
Production (13.2) (13.2) (13.2)
Technical revisions (17.2) (17.8) (11.2)
31 December 2019 68.8 123.8 194.9

International petroleum consultants DeGolyer and MacNaughton assess that on a gross basis, at the Tawke licence in the Kurdistan Region of Iraq containing the Tawke and Peshkabir fields, year-end 2019 1P reserves stood at 228 MMbbls, compared to 348 MMbbls at year-end 2018, after adjusting for production of 45 MMbbls and a downward technical revision of 75 MMbbls. Tawke licence 2P reserves stood at 400 MMbbls (502 MMbbls in 2018) and 3P reserves at 641 MMbbls (697 MMbbls in 2018).

Broken down by field, Tawke field gross 1P reserves stood at 176 MMbbls (294 MMbbls in 2018), 2P reserves at 284 MMbbls (376 MMbbls in 2018) and 3P reserves at 421 MMbbls (477 MMbbls in 2018). Peshkabir field gross 1P reserves stood 51 MMbbls (54 MMbbls in 2018), 2P reserves at 116 MMbbls (126 MMbbls in 2018) and 3P reserves at 220 MMbbls (unchanged from 2018).

Genel continues to take a conservative view of the Enhanced Oil Recovery project at the Tawke PSC, and will look to book reserves in relation to the project, which has the potential to increase recovery over the life of field, once enhanced performance has been demonstrated at the field.DeGolyer and MacNaughton has included23MMbbls of 2P and 45 MMbbls of 3P gross reserves, working interest portions of which are not included in the table above.

At Taq Taq, there is a minor technical downward revision of 2.1 MMbbls of gross 2P reserves associated with the unsuccessful TT-33 well, and these now total 44 MMbbls, with gross 1P reserves increasing by 3.3 MMbbls to 20.1 MMbbls, illustrating the continued strong underlying performance of the asset. McDaniel & Associates carried out the independent assessment of the Taq Taq licence.

Genel’s gross 2P reserves estimate relating to Phase 1A of the Sarta development remains 34.3 MMbbls.

CONVERTING RESOURCES TO RESERVES

Net oil resources (MMbbls) 1C 2C 3C
31 December 2018 36.8 73.7 121.3
Technical revisions 29.7 78.3 224.5
31 December 2019 66.5 152 345.8

Following completion of the acquisition in 2019, Genel estimated gross resources at Sarta to be c.500 MMbbls. This potential has now been validated through an external audit conducted by ERCE, who has estimated a mid-case total recoverable oil resource of 593 MMbbls, of which 264 MMbbls is classified as 2C resource. Production performance in 2020, and the results of the upcoming three well campaign in 2021, will set out a roadmap for the conversion of these resources into reserves.

The Bina Bawi oil development has been certified by ERCE as 17.1 MMbbls of 2C resources, 13.6 MMbbls of which are expected to be converted into 2P reserves should a commercial agreement be reached and FID be taken on the first phase of the oil project.

At Qara Dagh the QD-2 well will test the crestal portion of the prospect which, based on a rigorous re-mapping exercise, has a mean prospective resource estimated by Genel at c.400 MMbbls. Genel estimates that the downdip segment tested by the QD-1 well defines a 2C resource of 47 MMbbls.

(Source: Genel)

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)

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)

By John Lee.

Shares in DNO ASA, the Norwegian oil and gas operator, were trading down 7.5 percent on Thursday morning, after the company reported a net loss for the third quarter.

The company reported what it described as strong third quarter revenues of USD 227 million, up 33 percent from a year earlier, on the back of solid production averaging 99,300 barrels of oil equivalent per day (boepd) on a Company Working Interest (CWI) basis, up 22 percent year on year.

In its statement, the company added:

Notwithstanding strong underlying performance, 2019 third quarter results were impacted by non-recurring items as well as lower oil prices and higher exploration expenses, resulting in a net loss of USD 96 million.

In the Kurdistan region of Iraq, third quarter production at the Tawke license containing the DNO-operated Tawke and Peshkabir fields (shared 75-25 with partner Genel Energy plc) averaged 119,800 barrels of oil per day (bopd). The Company expects to exit the year with Tawke license production averaging 120,000 bopd and to maintain this rate into 2020. The Company recently reached a significant milestone of 300 million barrels of cumulative oil production from the Tawke and Peshkabir fields.

Activity remains high as the Company continues to deliver its largest drilling campaign in its 48-year history with some 36 wells in 2019, of which 22 are development/infill wells and 14 exploration/appraisal wells. DNO projects full-year operational spend of USD 620 million (post-tax), of which USD 454 million was spent through the end of the third quarter, including USD 244 million in Kurdistan and USD 210 million (post-tax) in the North Sea.

Financial results were impacted by impairment charges of USD 138 million, including USD 89 million for technical goodwill on the Brasse discovery (Norway) and USD 33 million for decommissioning of the Schooner and Ketch fields (United Kingdom).

With USD 228 million in cash from operations during the third quarter, the Company resumed its share buyback program and acquired 23 million shares at a cost of USD 35 million, lifting its overall stake to 58 million treasury shares, representing 5.35 percent of the total outstanding shares at end quarter. DNO also bought back an additional USD 17 million of FAPE01 bonds during the quarter.

DNO maintained its previously approved dividend distribution program with another semi-annual payment of NOK 0.20 per share to be made on 4 November 2019.

“We continue to deliver across a range of operating and financial targets even as we paused this quarter for early spring cleaning of our balance sheet,” said DNO’s Executive Chairman Bijan Mossavar-Rahmani. “Given global headwinds, we are budgeting at the low end of the industry’s Brent price range of USD 60-70 per barrel,” he added.

CWI production during the third quarter included 84,400 bopd from Kurdistan and 14,900 boepd from North Sea assets acquired earlier this year.

In 2019, nine wells were spud in Kurdistan through the end of the third quarter, with an additional ten wells planned for the fourth quarter. In the North Sea, 13 wells were spud through the end of the quarter, with an additional four wells planned for the fourth quarter, including DNO’s first operated exploration well, Canela, in the North Sea since 2007.

DNO exited the third quarter with a cash balance of USD 624 million in addition to USD 110 million in treasury shares and marketable securities.

(Source: DNO)

By John Lee.

DNO ASA, the Norwegian oil and gas operator, today announced what it described as solid first half 2019 financial and operating results as the company continued to deliver the largest drilling program in its 48-year history:

H1 2019 revenue totalled USD 470 million, up 62 percent from the same period last year, while net profit doubled to USD 119 million.

“DNO’s Company Working Interest (CWI) production averaged 107,100 barrels of oil equivalent per day (boepd) in H1 2019, up 39 percent from H1 2018, reflecting strong contributions from its fields in the Kurdistan region of Iraq (89,300 barrels of oil per day or bopd) as well as from its recently acquired North Sea assets (17,800 boepd).

“In Kurdistan, H1 2019 gross production at the Tawke license containing the DNO-operated Tawke and Peshkabir fields (shared 75-25 with Genel Energy plc) averaged 126,700 bopd, up 20 percent from H1 2018. In H1 2019, Tawke contributed 71,700 bopd and Peshkabir 55,000 bopd.

“Some 36 wells are planned in 2019 of which 23 are development/infill wells and 13 exploration/appraisal wells. DNO projects full-year operational spend of USD 680 million, split evenly between its core areas in Kurdistan and the North Sea.

“In addition to 15 wells spud in the first half of the year across the portfolio, plans for the second half include 12 wells at Tawke and three at Peshkabir, now the second largest operated field by an international oil company in Kurdistan after Tawke. Also in Kurdistan, two wells have been drilled and completed in the DNO-operated Baeshiqa license with the deeper well to be tested beginning in August.

“Elsewhere, the Company continues to pursue an active North Sea strategy with plans to drill six more wells in the second half of the year in addition to the nine spud in the first half. Also, DNO was recently awarded as operator two new exploration licences in the United Kingdom.

“DNO exited the second quarter with a cash balance of USD 574 million in addition to USD 94 million in treasury shares and marketable securities.

(Source: DNO)

Stephen Whyte, Chairman of Genel Energy, gave the following update on the business at the Company’s Annual General Meeting, held in London on Thursday:

Genel had a very successful 2018, with free cash flow generation of $164 million even while making significant investment in growth.

2019 has seen us continue this success. We are delivering year-on-year production growth, we have made portfolio additions that perfectly complement our existing asset base, and our cash position continues to strengthen.

Genel is participating in 20 wells this year, the most of any IOC in the Kurdistan Region of Iraq (‘KRI’). Drilling on the Tawke and Peshkabir fields is ongoing, with activity ramping up as we progress through 2019. Year to date production from the Tawke PSC is currently c.126,800 bopd, with Peshkabir driving impressive growth compared to the prior year’s period.

The drilling programme at Taq Taq has now delivered three successful wells, and year to date production is currently c.13,300 bopd, an increase from the 2018 average of 12,350 bopd. We are continuing to achieve successful results from the flanks of the field, and are drilling ahead at pace.

Total Genel working interest production across all assets is 37,600 bopd, running slightly ahead of our expected 10% increase in year-on-year production.

Even as we invest to deliver this production increase we continue to improve our cash position, generating almost $50 million in free cash flow in the first four months of the year. We expect to keep up this impressive run rate. Our current expectation is that we will generate well over $100 million in free cash flow over the course of 2019, prior to the payment of the dividend, even after increasing expenditure on our growth opportunities.

The results at Peshkabir show the significant success that can be obtained from our low-cost, rapid return operations in the KRI. While investing to increase production from 12,000 bopd to 55,000 bopd over the course of the year, Genel still generated $50 million of free cash flow from the asset. This level of return is hard to match anywhere else in the world, and illustrates why we continue to look for further opportunities in the KRI.

Put simply, the KRI is a very good place in which to operate. Payments have been made on a monthly basis for over three and a half years now, the political situation continues to improve – with Baghdad having made budget payments to the Kurdistan Regional Government for over a year – and the low-cost of operations helping to set a breakeven oil price at an asset level of $20/bbl.

We are still looking to diversify the portfolio, but we will not ignore further opportunities in the KRI – and indeed continue to focus on these where our presence on the ground and regional expertise mean we can maximise their value potential for shareholders.

In that context, as you are probably aware by now, we were delighted to add Sarta and Qara Dagh to the portfolio. They tick all of the boxes, as we partner with Chevron on assets that offer a mixture of near-term production and long-term growth potential.

Sarta is expected to enter production in the middle of 2020, and we will develop the field utilising a similar strategy to the one that was so successful (and cash-generative) at Peshkabir. While we do not want to get ahead of ourselves there are hydrocarbons throughout the structure in all of the typical KRI reservoirs, from the Tertiary down to the Triassic.

We are focused on building an even stronger business with material growth potential, providing a clear and compelling investment case that offers the opportunity for a significant increase in shareholder value. As we prioritise that growth, we have also initiated a material and sustainable dividend, providing investors with a compelling mix of growth and returns.

I am delighted that Bill Higgs is now sitting alongside me as CEO, and that Esa Ikaheimonen, our CFO, has also joined the Board.

On a personal level, the transition that I was keen to oversee is now complete. As such I have decided that this will be my last AGM as Chairman of Genel, and I will leave the Company for new challenges once a suitable successor has been identified. When I joined the Board two years ago the share price was under 80p, production was declining, Genel had unpaid oil receivables of over $400 million and $142 million in net debt.

Genel’s production and net cash position is now rising, the portfolio is positioned to provide material organic growth, and Genel now has the right team to deliver that growth. Management has a wealth of experience in the sector, experience that can also be utilised to make further value-accretive portfolio additions and optimise our growing cash pile to generate value for shareholders.”

Genel will announce results for the six months ending 30 June 2019 on Tuesday 6 August 2019.

(Source: Genel Energy)

DNO, as operator of the Tawke field in Iraqi Kurdistan, has today issued an update on licence activity.

Gross production from the Tawke licence, containing the Tawke and Peshkabir fields, averaged 126,759 bopd during the first quarter of 2019.

Tawke production currently averages c.73,000 bopd, and Peshkabir c.54,000 bopd. There is an active 2019 drilling campaign underway at the Tawke and Peshkabir fields, with a total of up to four Peshkabir wells and up to 14 Tawke wells.

The Peshkabir-9 well was completed and placed on production during the first quarter. The Peshkabir-10 well was spud in February and will come onstream shortly. The Peshkabir-11 well will spud later this month. Peshkabir production averaged 53,830 bopd during the first quarter.

Peshkabir has now generated $1 billion in gross revenue, or four times the total spend to date.

At the Tawke field, the Tawke-52 Cretaceous well was completed and placed on production during the quarter. The Tawke-54 Cretaceous well was spud in February and came onstream in mid-April, and the Tawke-55 Cretaceous well spud in April. Tawke field production averaged 72,929 bopd during the first quarter.

(Source: Genel Energy)