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DNO Confirms Payment for Kurdish Oil


By John Lee.

DNO ASA, the Norwegian oil and gas operator, today confirmed receipt of USD 30 million (36 billion Iraqi dinars) as first payment for oil exported by the Kurdistan Regional Government from the Tawke field during 2014.

The payment will be shared by DNO (USD 20.625 million) and partner Genel Energy plc (USD 9.375 million), reflecting their relative participation in the Tawke license operated by DNO.

Bijan Mossavar-Rahmani (pictured), DNO’s Executive Chairman, commented:

“This payment and the payments to follow until producers receive full contractual entitlements for exports propel us towards regularisation and internationalisation of the oil industry in Kurdistan…

 “We are committed to Kurdistan and will do more with more.”

(Source: DNO)

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DNO Third Quarter Results


By John Lee.

DNO, the Norwegian oil and gas operator, has reported third quarter 2014 gross production of 124,396 barrels of oil equivalent per day (boepd) on the strength of uninterrupted operations at its flagship Tawke field in the Kurdistan region of Iraq.

Increasing volumes of Tawke oil were directed from local sales to exports through Ceyhan, Turkey during the quarter by the Kurdistan Regional Government which announced last Friday that a payment of USD 75 million would be made to the producing companies towards their share of exports.

The statement also indicated that other payments would follow the November payment on a regular basis, and that with further production increases, producers would receive their full contractual entitlements.

Bijan Mossavar-Rahmani (pictured), DNO’s Executive Chairman, said:

We are of course very pleased that increasing exports, importantly from Tawke, are enabling Kurdistan to meet its financial needs at a very difficult time and to begin to allocate to DNO and other producers our contractual share of export revenues.

“DNO is fully committed to Kurdistan and will continue to reinvest revenues from exports to develop our extensive asset base in the country.”

The reduction in local Kurdistan sales contributed to a drop in third quarter operating cash flow to USD 25 million. The company recorded an operating loss of USD 41.6 million on third quarter operating revenue of USD 115.7 million following a one-off charge for impairments as it continues to cut costs and high grade its portfolio.

Absent this charge, operating profit would have totaled USD 3.8 million during the quarter. Year-to-date operating profit is USD 43.6 million. DNO ended the quarter with cash balances of USD 165.7 million, excluding USD 97.0 million held in treasury shares and shares of RAK Petroleum plc.

Drilling of additional wells continued without interruption during the quarter at Tawke and a stabilizing security environment allowed resumption of field expansion program, though with some delay. Costs related to Tawke development totaled USD 41.7 million in the third quarter.

(Source: DNO)

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DNO Increases Exports to Turkey


By John Lee.

In a market update this morning, Norwegian oil and gas operator DNO said it is logging the 834 meter horizontal section of the recently drilled Tawke-28 well and plans to place the well on production by early November. The next horizontal well in the field development program, Tawke-27, will spud shortly thereafter.

Elsewhere in Kurdistan, the Benenan-4 well has indicated higher volumes of oil in place in the Erbil license with movable Najmeh oil tested deeper than in previously drilled Benenan field wells. Further testing and evaluation are underway.

On the Dohuk license, DNO continues to re-assess the Summail field development plan in light of sharply declining gas production from the first two wells, one of which is now shut-in. A recently completed third well targeting deep gas did not encounter significant volumes of gas but instead discovered a 200 meter oil column in the Cretaceous interval by testing oil in the well’s three deepest zones. The Summail-1 well had earlier confirmed the presence of heavy oil in the Jurassic interval.

The company has taken steps to mitigate delays to its Tawke 200,000 barrel per day deliverability target resulting from the withdrawal of third party contractors from Kurdistan during the past few months. Installation of the new 24 inch pipeline connecting the Tawke field to Fish Khabur is proceeding and slated for completion by yearend. The new pipeline will increase export capacity and provide transportation system redundancy. Other upgrades to infrastructure and facilities to increase production and processing capacity at the Tawke field are progressing as planned.

Meanwhile, exports of Tawke oil to Turkey by the Kurdistan Regional Government for its own account currently average approximately 90,000 barrels per day. Local sales decreased to 29,960 barrels per day during the third quarter and currently average approximately 20,000 barrels per day.

(Source: DNO)

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Ergil Completes DNO Summail Contract


By John Lee.

Turkish engineering company Ergil has announced that it has successfully completed manufacturing of storage tanks and storage tank equipment for DNO’s Summail Gas Project — the first gas field developed by DNO in the Kurdistan Region.

The scope of the order included supply of insulated amine storage tank, teg storage tank, portable storage tank, RO water tank, amine run down tank and teg run down tank equipped with electrical heaters.

Oktay Altunergil, CEO of ERGIL, commented:

It was a great pleasure and experience to work with DNO in the past and I am very pleased that our business set to continue.

“DNO is the fastest growing producer and the number one in proved and probable reserves of oil and gas in Kurdistan.

“We are excited to be involved in DNO’s projects again by supplying ERGIL’s world class quality products and services.

(Source: Ergil)

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DNO: Tawke Production Hits 120,000 bpd


By John Lee.

DNO International ASA (“DNO”), the Norwegian oil and gas operator, today announced that production from the Tawke field in the Kurdistan region of Iraq reached 120,021 barrels of oil per day in May, the first time average monthly production has exceeded 100,000 barrel per day.

May production was split 60-40 between local sales and deliveries to the export pipeline at Fish Khabur.

Ahead of its Annual General Meeting to be held at 10:00 CET in Oslo, the Company also announced that production from the Tawke field passed the 75 million barrels cumulative mark on 31 May.

Plans to increase Tawke deliverability to 200,000 barrels per day by yearend 2014 continue on schedule. As part of that expansion program, production testing has commenced on Tawke-26, the first of two recently completed Tawke horizontal wells, with Tawke-24 to follow. A third horizontal well, Tawke-25, is drilling ahead at 1,873 metres.

Elsewhere in Kurdistan, sales of natural gas from the Summail field to the Dohuk power plant commenced in late May and currently average 60 million cubic feet per day from the first well, some 20 percent ahead of plan. Sales will climb as a second well is put on production in June, followed by a third well later this summer.

“We are focused like a laser on scale and speed of delivery, notwithstanding stretch targets, across our portfolio of assets,” said Bijan Mossavar-Rahmani, DNO International’s Executive Chairman.

(Source: DNO)

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First Natural Gas Arrives at Duhok Power Station


The Kurdistan Regional Government has announced the successful delivery via pipeline of the first quantities of natural gas from the gas field at Summail to fuel the Duhok Power Station (pictured).

The Summail Gas Field lies within the area of the Duhok Production Sharing Contract (PSC) and is operated by the Norwegian company DNO, which together with Anglo-Turkish PSC partner Genel Energy, signed a landmark gas sales agreement (GSA) with the KRG on 18 September 18 2013.

Long-term deliveries are expected to reach 120 million cubic feet per day sold on a take-or-pay basis for the duration of the production, showing the KRG can successfully develop its newly discovered gas assets in Kurdistan.

Under the long-term GSA, the KRG will purchase up to 120mmscf/d. Initial volumes will start at around 55mmscf/d, ramping up to 120mmscf/d within the next few months, and thereafter itis hoped that gas production will eventually rise to around 200mmscf/d.

The Duhok Power Station is a 750 MW power plant in the city of Duhok, located 40 kilometres from the field. The power station’s six turbines have been run on expensive diesel until now, due to significant delays in originally expected gas deliveries from the Khor Mor area. Each of the turbines consumes around 24 million litres per month of diesel, or around 27.50mmscf/d natural gas.

The locally-produced natural gas will displace diesel from the power station and is part of a KRG strategy to save the people of Kurdistan millions of dollars every year in costly diesel imports for power generation.

Natural Resources Minister Ashti Hawrami said that the successful commissioning of the Duhok Power Station operated by Mass Global, the Kurdistan main and feeder gas pipelines constructed by Kar Group, and the Summail gas facilities built by DNO, represented a significant step forward for the Kurdistan Region.

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DNO Announce First Quarter Results


By John Lee.

DNO International ASA, the Norwegian oil and gas company, today announced first quarter 2014 net profit of USD 24 million on operating revenue of USD 113 million.

Production climbed by more than a quarter from the previous quarter to 45,744 barrels of oil equivalent per day on a company working interest (CWI) basis.

The first quarter production figure includes oil deliveries from the Tawke field in Kurdistan to storage facilities in Ceyhan, Turkey. These deliveries were stepped up commencing April 26 and have been averaging some 100,000 barrels per day gross over the past ten days from a total field production of over 120,000 barrels per day, with the balance sold to the local market in Kurdistan.

“We have our foot firmly on the accelerator in Kurdistan where we are now the fastest growing producer and also number one in proven and probable oil and gas reserves,” said Bijan Mossavar-Rahmani, DNO International’s Executive Chairman.

During the quarter, operational cash flow of USD 89 million exceeded capital spending of USD 85 million. The Company’s free cash balance at 31 March was USD 242 million in addition to which the Company held financial assets totalling USD 95 million. These financial assets include DNO International treasury shares and a 4.2 percent stake in RAK Petroleum PCL, DNO International’s largest shareholder.

Operationally, horizontal drilling has continued to deliver exceptional results at the Tawke field. During the first quarter, the Company brought two more high deliverability horizontal wells on production as part of its back-to-back drilling campaign that will see nine such wells completed by yearend. Elsewhere in Kurdistan, the Company has initiated first sale of oil from the Benenan field and first flow of gas from the Summail field.

Additionally, the Company has an active exploration and appraisal drilling program over the next nine months targeting gross prospective resources of 570 million barrels of oil with seven wells across four countries.

(Source: DNO)

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DNO Announce MENA Fellowship Fund


By John Lee.

Harvard Kennedy School (HKS) today announced the creation of the Middle East-North Africa Graduate Fellowship Fund underwritten by a $1 million gift from the Norwegian oil and gas company DNO International ASA.

The fellowship will support qualified applicants who enroll at HKS through the Edward S. Mason Program. The internationally focused Mason Program brings accomplished professionals from around the world to earn a Mid-Career Master in Public Administration (MC/MPA) degree, with a focus on developing analytical and leadership skills.

Bijan Mossavar-Rahmani, DNO International’s Executive Chairman was awarded his MPA in 1982 and said of the donation:

“My DNO International colleagues, which include two other HKS graduates, and I are pleased to help support access to the finest school of public policy in the world by the most talented mid-career students from a region undergoing dramatic societal transformation.”

The program will cover tuition, fees and living expenses for the one-year term of the Mason Program, with awards available beginning with the 2014-15 academic year. Along with the rigorous MC/MPA curriculum, the Mason Program offers intensive co-curricular activities including targeted seminars and workshops culminating in the Mason Certificate in Public Policy and Management.

David Ellwood, the Scott M. Black Professor of Political Economy and Dean of HKS, expressed his delight at the donation:

“We are deeply grateful to DNO International for this outstanding support for students from the Middle East and North Africa and for the leadership that Bijan Mossavar-Rahmani has shown in this effort. These students represent a region of great importance to the world, and we are fortunate to play a role in developing their knowledge and expertise in working towards the public good. We look forward to welcoming the first beneficiaries of this fellowship.”

(Source: DNO, Harvard Kennedy School)

 

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