Following closure of the Iraq-Türkiye Pipeline last March, the Company gradually reopened the Tawke and Peshkabir fields (DNO 75 percent and Genel Energy International Ltd 25 percent) and stepped up deliveries to local trading companies in Kurdistan. Production continues to increase; so far in the fourth quarter output is averaging double the level of the third quarter.

The DNO-Genel contractual entitlement, currently around one-half of volumes produced, is sold at prices that vary narrowly in the mid USD 30s per barrel, and payments are made in advance before any oil is delivered.

DNO has over the last 12 months recovered around USD 15 million, including USD 8 million in October, of the accumulated KRG debt to DNO for previous oil sales in 2022 and 2023 (in excess of USD 300 million).

“As the Middle East becomes more challenging, we continue to build up our North Sea portfolio,” said DNO Executive Chairman Bijan Mossavar-Rahmani. ‘Even as we demonstrate the resilience of DNO’s business model in Kurdistan by reducing costs and stepping up local sales, we create value in the North Sea through exploration”, he added. “It is quite a balancing act across different geographic and geopolitical landscapes and not many of our peers can pull it off.”

Offshore Norway, DNO participated last quarter in the Carmen discovery (30 percent), the country’s largest in a decade, and in the DNO-operated Norma well (30 percent interest), a play-opening discovery located near existing infrastructure 20 kilometers northwest of the Balder hub and 30 kilometers south of the Alvheim hub. To date this year, the Company has participated in discoveries totaling 100 million barrels of oil equivalent net to DNO.

At the earlier discoveries, Ofelia (DNO 10 percent) and Bergknapp (DNO 30 percent), drilling of appraisal wells are currently ongoing, with coring and logging operations underway at both wells.

Last week, the UK government’s North Sea Transition Authority awarded 27 new licences in the 33rd Offshore Licensing Round in areas prioritised because of the potential to be brought into production more quickly than other assets. DNO announced has been awarded a 50 percent operated interest in Blocks 9/9f, 9/10c, 9/14c and 9/15d. Aker BP UK Ltd will hold the remaining 50 percent in the licensed area, adjacent to the Norwegian border and just west of the Aker BP operated Alvheim hub on the Norwegian Continental Shelf.

Meanwhile, according to a recent statement by the Prime Minister of Iraq, Baghdad and Ankara are prepared to recommence flows from Kurdistan as soon as certain unspecified agreements between the international oil companies and Iraq and Erbil are reached. In response, the Association of the Petroleum Industry of Kurdistan (APIKUR), of which DNO is one of six members, has stated that the member companies will not be in a position to produce oil for pipeline exports until it is clear how they will be paid for their contractual entitlements of oil already sold and delivered for export and for future sales of such oil for export. APIKUR members are owed nearly USD 1 billion in overdue and unpaid arrears.

Projected total 2023 operational spend across the Company is reduced by USD 40 million to USD 550 million, of which USD 418 million (76 percent) have been incurred as of end Q3 2023. The reduction is largely due to stronger USD/NOK exchange rate impacting NOK denominated spending in the North Sea and further reductions in ongoing costs in Kurdistan. All operational spend in Kurdistan was covered by revenue from local sales in Q3 2023, plus USD 20 million towards DNO’s own arrears to contractors and services companies for previously incurred expenditures pursuant to an earlier agreed monthly payment plan. As of the end of the quarter, USD 20 million remained to be paid.

The balance sheet remains strong with an equity ratio of 48 percent as the Company exited the quarter with cash deposits of USD 708 million and net cash of USD 142 million.

The Board of Directors has authorized dividend payment of NOK 0.25 per share to be made on or about 24 November 2023, maintaining the Company’s quarterly distribution program.

KeyFacts Energy: DNO Norway country profile