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Tawke license. Spurred by quarterly revenue of USD 361 million and free cash
flow of USD 167 million, the Company reduced debt and exited the quarter in a
positive net cash position for the first time since 2018.
“DNO is committed to put its capital to work in its core competency and capture
new opportunities created as peers and even some of the largest European
companies scale back spending and focus instead on harvesting,” said Executive
Chairman Bijan Mossavar-Rahmani. “We believe in the oil and gas business and in
our responsibility to all stakeholders, including host governments who want
to capitalize on current prices and consumers who now call for more production,
not less,” he added.
Operational cash flow totaled USD 341 million, including USD 50 million towards
arrears built up by Kurdistan from non-payment of certain 2019 and 2020 Tawke
invoices. These arrears, which stood at USD 259 million at yearend 2020, were
reduced to USD 87 million as of 30 June 2022, excluding interest.
The Company’s operational spend in the second quarter totaled USD 198 million in
line with the USD 800 million projection for the year. During the quarter,
operational spend of USD 81 million in Kurdistan was divided between the Tawke
license (USD 66 million) and the Baeshiqa license (USD 15 million); operational
spend in the North Sea stood at USD 117 million.
Operating profit dropped to USD 81 million from USD 236 million in the previous
quarter due to asset impairments of USD 127 million primarily related to the Ula
area in the North Sea and expensed exploration of USD 48 million.
The Company reduced its interest-bearing debt through a USD 200 million bond
redemption and exited the quarter with cash deposits of USD 801 million. With
USD 671 million in bond and reserves-based lending debt, net cash stood at USD
129 million.
Gross production at the Tawke license averaged 106,900 barrels of oil per day
(bopd) during the second quarter, of which Peshkabir contributed 62,300 bopd and
Tawke 44,600 bopd, the latter representing the first quarterly production
increase since 2015 at this legacy field as new wells are drilled, workovers
conducted on existing ones and gas injection continued.
Of total Kurdistan production, 80,400 bopd were net to DNO’s interest. North Sea
net production averaged 11,600 barrels of oil equivalent per day (boepd),
bringing the Company’s total quarterly net production to 92,000 boepd.
In the second quarter, four new production wells were brought onstream in the
Tawke license with three at Tawke and one at Peshkabir. Together with wells
drilled in the first quarter, natural field decline has been arrested and
reversed, including at Tawke, raising the Company’s full-year projection to
107,000-109,000 bopd.
Following government approvals, DNO commenced trucking of production in mid-June
from the Zartik-1 discovery well in the operated Baeshiqa license for export at
an average rate of 600 bopd. Production from the well has been choked back as
the Company targets zones with lower gas-to-oil ratios to avoid flaring.
Development of the license continues with the drilling of Zartik-2 and Zartik-
3, to be followed by Baeshiqa-3 in the fourth quarter.
In the North Sea, operated Brasse field development progressed into front end
engineering and design ahead of planned project sanction by yearend 2022. The
Company remains an active North Sea explorer with three more exploration wells
to be drilled this year in addition to the four already drilled in the first
half of 2022, one of which, Kveikje (DNO 29 percent), is considered a likely
commercial discovery, as previously reported.
An earnings call with DNO executive management will be held today at 11:00 am
(CET). A link to the call is available on the Company’s homepage www.dno.no.
Key figures
Q2 2022 Q1 2022 Full Year 2021
Gross operated production (boepd) 107,178 106,465 108,713
Net production (boepd) 91,937 92,548 94,477
Revenues (USD million) 361 339 1,004
Operating profit/-loss (USD million) 81 236 321
Net profit/-loss (USD million) 72 140 204
Free cash flow (USD million) 167 152 362
Net debt (USD million) -129 27 153
For further information, please contact:
Media: media@dno.no
Investors: investor.relations@dno.no
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 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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