DNO ASA, the Norwegian oil and gas operator, this week released its 2017 Annual Report and Accounts together with its 2017 Annual Statement of Reserves and Resources and reported improvements across key financial and operational metrics.

2017 full-year results highlights

• Operated production in 2017 of 113,530 boepd, up from 112,624 boepd in 2016;
• Gross output at Tawke license in Kurdistan averaged 109,047 bopd, of which 108,245 bopd were delivered for pipeline export through Turkey;
• Company Working Interest (CWI) production of 73,678 boepd, up from 69,188 boepd in 2016;
• Revenues of USD 347 million in 2017, up from USD 202 million in 2016;
• Kurdistan revenues totaled USD 331 million and Oman revenues totaled USD 16 million;
• Operating profit of USD 521 million, up from USD 6 million in 2016, on back of recognition of USD 556 million of historical receivables under a 2017 settlement;
• Operational spend of USD 259 million, up from USD 125 million in 2016;
• Year-end cash balance of USD 430 million, up from USD 261 million at end-2016; and
• CWI proven and probable reserves (2P) of 384 million barrels of oil equivalent (MMboe), up from 368 MMboe at end-2016. 

Annual 2017 revenues climbed to USD 347 million, up 72 percent from year earlier levels. Operating profit totaled USD 521 million, up from USD 6 million in 2016, with the recognition as other income of USD 556 million under the August 2017 Kurdistan Receivables Settlement Agreement. Excluding the settlement agreement and non-cash impairments, operating profit in 2017 more than doubled to USD 72 million. And notwithstanding a doubling of operational spend to USD 259 million, the Company ended the year with a cash balance of USD 430 million.
 
Company Working Interest (CWI) production increased to 73,700 barrels of oil equivalent per day (boepd) from 69,200 boepd in 2016 (operated production in 2017 was 113,500 boepd, up from 112,600 boepd in 2016). Lifting costs last year averaged USD 3.6 per barrel of oil equivalent. 
 
DNO's production continues to be driven by the Tawke field in Kurdistan, where output in 2017 averaged 105,500 barrels of oil per day (bopd). The adjacent Peshkabir field, brought on stream midyear, contributed another 3,600 bopd to bring total Tawke license production to 109,100 bopd in 2017. The Company plans to bolster production from the license with 10 new wells in 2018.
 
"We are committed this year to continue to outdrill, outproduce and outperform all other international companies in Kurdistan - combined," said DNO's Executive Chairman Bijan Mossavar-Rahmani.
 
At year-end 2017, DNO's CWI 1P reserves climbed to 240 million barrels of oil equivalent (MMboe) from 219 MMboe at year-end 2016, after adjusting for production during the year, technical revisions and an increase in DNO's operated stake in the Tawke license from 55 percent to 75 percent. On a 2P basis, DNO's CWI reserves stood at 384 MMboe (up from 368 MMboe) and on a 3P basis, DNO's CWI reserves stood at 666 MMboe (up from 521 MMboe). DNO's yearend 2017 CWI contingent resources (2C) were estimated at 99 MMboe, down from 161 MMboe at yearend 2016, following reclassification of certain contingent resources to reserves.
 
On a gross basis, at yearend 2017, 1P reserves at the Tawke license containing the Tawke and Peshkabir fields totaled 348 MMboe (353 MMboe at yearend 2016) after adjusting for production of 40 MMboe during the year and technical revisions; 2P reserves totaled 513 MMboe (536 MMboe at yearend 2016); 3P reserves totaled 880 MMboe (725 MMboe at yearend 2016) and 2C resources totaled 91 MMboe (211 MMboe at yearend 2016) following reclassification.

International petroleum consultants DeGolyer and MacNaughton carried out the annual independent assessment of the Tawke and Peshkabir fields. DNO internally evaluated the remaining assets.

Business development
In 2017, DNO re-entered the North Sea by acquiring Origo Exploration Holding AS, with its highly experienced exploration team and an existing portfolio of offshore exploration licenses in Norway and the United Kingdom. Origo was subsequently renamed DNO Norge AS and the portfolio has since expanded through the award of additional exploration licenses in Norway’s APA 2017 licensing round.

DNO continues to develop a pipeline of new business opportunities with a focus on its core Middle East and the North Sea. It is actively pursuing opportunities across the E&P lifecycle, including exploration, development and production assets both directly as well as through possible corporate acquisitions.

In 2017, three licenses were relinquished as part of the continuous high-grading of the Company’s portfolio. This included Saleh and RAK Onshore in the United Arab Emirates and Block 36 in Oman.

Outlook
In 2018, the Company plans to hike year-on-year Kurdistan operational spend by more than 50 percent to USD 250 million – up more than three times 2016 levels. A total of 11 wells are planned at the Tawke license, of which six will be at the Peshkabir field and five at the Tawke field. At Peshkabir, DNO plans to reach 30,000 bopd by mid-2018 and continue to ramp up production from the field in the second half of the year.