Shares in Norway’s DNO ASA jumped 8.7 percent this morning following the announcement that the company has reached a “landmark settlement of outstanding receivables owed to the Company for past crude oil deliveries“, and the announcement of half-year revenues up 43 percent from the same period last year.
Under the settlement, DNO has been assigned the 20 percent interest in the Tawke license held by the Kurdistan Regional Government (KRG).
Following the settlement, DNO holds a 75 percent operated stake in the license containing the Tawke and Peshkabir fields with combined proven and probable reserves in excess of 500 million barrels and production in excess of 100,000 barrels of oil per day.
In addition to the 20 percent interest, the Company will receive three percent of gross license revenues each month from the Government over a five-year period. The settlement is effective as of 1 August 2017.
DNO has settled its claims for all outstanding Tawke license receivables from the Government and the Government has exercised its Tawke license audit rights to its satisfaction for the period up to the effective date and has no adjustment claims.
The Government has also discharged DNO from certain payment obligations including production bonuses, license fees and a USD 150 million water purification project that is no longer required by the Government.
The removal of these liabilities and the transfer to DNO of the 20 percent interest and the right to the three percent revenue stream will bolster the Company’s balance sheet and future cash flow.
Bijan Mossavar-Rahmani (pictured), DNO’s Executive Chairman, said:
“We are very pleased with the Government’s initiative to settle receivables and normalize export payments to the operators. This sends a strong positive signal to investors and helps restore confidence in Kurdistan’s oil sector.”
DNO’s June-July 2017 outstanding invoices for Kurdistan exports will continue to be paid under the payment arrangement in place since January 2016.
(Sources: DNO, Yahoo!)