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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