DNO ASA, the Norwegian oil and gas operator, today released its 2015 Annual Report and Accounts together with its 2015 Annual Statement of Reserves.
The company reported record levels of operated production in 2015, driven by strong performance in the Kurdistan region of Iraq, though the company's financial results were impacted by the sharp drop in world oil prices and lower payments for exports in Kurdistan.
Operated production was up 23 percent to 144,500 barrels of oil equivalent per day (boepd) while revenues dropped to USD 187 million in 2015, down 59 percent from a year earlier. Gross production from DNO's flagship Tawke field in Kurdistan averaged 135,200 barrels of oil per day (bopd), of which 114,100 bopd was delivered for pipeline export through Turkey.
Capital expenditures in 2015 were reduced to USD 51 million from USD 297 million in 2014. The company reported a 2015 operating loss of USD 174 million (operating loss of USD 243 million in 2014) on the back of lower revenues, restructuring and impairment charges. DNO ended the year with a cash balance of USD 238 million, up from USD 114 million at end-2014.
"With a strong balance sheet, major development projects already completed and the flexibility to align our spending with our earning, we are well-positioned among our peer group," said DNO's Executive Chairman Bijan Mossavar-Rahmani. "We are cautiously optimistic oil prices will recover in the coming months but remain stubbornly resilient if they don't," he added.
DNO's year-end 2015 Reserve Life Index (R/P) stood at 12.2 years on a proven and probable (2P) reserves basis and 16.3 years on a 2P reserves and 2C contingent resources basis.
New investments at Tawke were significantly curtailed in 2015 due to irregular payments in Kurdistan. Notwithstanding, Tawke gross proven (1P) oil reserves increased to 387.0 million barrels (MMbbls) from 319.9 MMbbls at year-end 2014 with improved confidence about primary recovery rates at the field.
At Tawke, gross 2P reserves and 2C contingent resources stood at 643.2 MMbbls, down from 698.0 MMbbls at year-end 2014. Gross 2P reserves dropped to 543.0 MMbbls from 680.3 MMbbls after adjusting for a record 49.3 MMbbls produced during the year, technical revisions of 5.5 MMbbls and a re-categorization of 82.5 MMbbls from 2P reserves to 2C contingent resources pending both a review of enhanced recovery options at Tawke and a decision to commit funds towards a field-wide redevelopment program.
A new payment arrangement announced on 1 February 2016 by the Kurdistan Regional Government in line with contractual entitlements has set the foundation for higher spending at Tawke. Investments already launched include new production wells, remedial work at existing wells and installation of water handling facilities. Previous Tawke production guidance remains unchanged with output expected to climb 10 percent by mid-year from January 2016 levels.
The company also plans to drill the Peshkabir-2 well to appraise the previous Jurassic discovery and explore the Cretaceous zone. If successful, the Peshkabir field can be quickly tied back to existing infrastructure at Fish Khabur only 10 kilometers away.
"We have long taken a diligent, transparent and prudent tack with Tawke and are pleased it continues to rank first in reserves, production and exports among fields operated by international oil companies in Kurdistan," said Mossavar-Rahmani.
As of 31 December 2015, DNO's Company Working Interest (CWI) 2P reserves and 2C contingent resources were estimated at 523.1 million barrels of oil equivalent (MMboe), down from 590.3 MMboe at year-end 2014. CWI 2P reserves were estimated at 391.5 MMboe, down from 483.6 MMboe at year-end 2014 after adjusting for CWI production of 32.3 MMboe during the year, technical revisions of 5.9 MMboe and a re-categorization of 53.9 MMboe from CWI 2P reserves to CWI 2C contingent resources. CWI 2C contingent resources were estimated at 131.6 MMboe, up from 106.7 MMboe at year-end 2014.
International petroleum consultants DeGolyer and MacNaughton carried out the annual independent assessment of the Tawke field. The company internally evaluated the remaining assets.
The 2015 Annual Report and Accounts and the 2015 Annual Statement of Reserves, prepared in accordance with Oslo Stock Exchange listing and disclosure requirements (Circular No. 1/2013) utilizing the Norwegian Petroleum Directorate classification system, are attached and also available on the company's website www.dno.no.