Sales and Cash-Flow Up at DNO

Sales and cash-flow were up at Norwegian oil producer DNO in the second quarter of 2010, but its shares are down 0.8% this morning on the Norwegian bourse.

The company, which has significant operations in Iraqi Kurdistan, issued the following statement:

DNO International ASA achieved an EBITDA of NOK 171 million [$27.8m] from total sales of NOK 285 million [$46.3m] in the second quarter of 2010. Both sales and EBITDA were up by 10 per cent from Q1 to Q2. The improved results are mainly related to increased production.

“We are satisfied with the financial results from our operations in the second quarter. The higher oil production and improved cash flow from operations enable us to plan for new project developments and increase exploration drilling going forward “says Managing Director Helge Eide.

Key figures (NOK million)

Q2 2010 Q1 2010 Q2 2009 YTD 2010 YTD 2009
Sales 284.7 258.6 225.9 543.2 407.6
EBITDA 171.2 155.6 79.5 326.8 85.0
Netback 140.6 138.7 62.8 279.3 57.2
Net profit before impairment 77.6 14.9 115.2 92.5 261.8
Impairment loss on financial assets (1) -198.8 -198.8 -8.7
Net profit (loss) -121.1 14.9 115.2 -106.3 253.1
Net cash from operations 182.6 65.5 82.1 248.1 -38.7
Working interest prod’n (bopd) (2) 15,748 12,442 11,316 14,104 9,324

Note 1) Impairment mainly related to lower share price in Det norske oljeselskap, where DNO owns 11.7% of the shares.

Note 2) Kurdistan export volumes in 2009 excluded.

Cash flow from operations increased from NOK 66 million in the first quarter to NOK 183 million in the second quarter. The Company’s cash position was NOK 822 million at the end of the second quarter, up from NOK 671 million in the previous quarter. Total available capital resources in the form of cash and financial assets were approximately NOK 1.1 billion at the end of the second quarter 2010.

As required under the IFRS accounting standards, DNO booked a non-cash impairment loss of NOK 199 million in the second quarter, mainly related to lower share price in Det norske oljeselskap ASA. This is the main reason for the net loss of NOK 121 million in the quarter.

DNO is now preparing for a new field development and increased exploration activity. Over the next 12 months, the Company is planning to drill at least five exploration wells.

“Going forward we will seek to have a good balance between new exploration drilling and development projects with the aim to both add new production as well as new reserves and resources to DNO”, says Helge Eide.

DNO’s working interest production increased to 23,477 bopd in June. Preliminary figures for July show a working interest production of around 27,000 bopd. Current production volumes in Kurdistan are based on short term delivery arrangements and may continue to show significant fluctuations going forward.

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