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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 CO(2
)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.
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For further information, please contact:
Media: media@dno.no
Investors: investor.relations@dno.no
Tel: +47 23 23 84 80
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DNO ASA is a Norwegian oil and gas operator focused on the Middle East and the
North Sea. Founded in 1971 and listed on the Oslo Stock Exchange, the Company
holds stakes in onshore and offshore licenses at various stages of exploration,
development and production in the Kurdistan region of Iraq, Norway, the United
Kingdom, Netherlands, Ireland and Yemen.
This information is subject to the disclosure requirements pursuant to section
5-12 of the Norwegian Securities Trading Act.
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