DNO ASA, the Norwegian oil and gas operator, said it would hike spending this year in the Kurdistan region of Iraq by 50 per cent to US$250 million on back of a stronger financial performance in 2017 and regular export payments.
Annual revenues for last year stood at $347 million, up 72 per cent year-on-year with quarterly revenues rising to their highest in three years to $116 million, the company said in a statement. DNO swung to a net profit for 2017 of $495 million compared to a net loss of 35.3 million in the previous year. Its fourth quarter net profit was $30.6 million, also swinging from a loss in the prior-year period.
The company fast tracked the development of the Peshkabir field with two wells currently producing a total of 16,000 barrels of oil per day (bopd) and commingled for export with another 97,000 bopd from the other DNO-operated field, Tawke, on the same license.
"We made the Peshkabir Cretaceous discovery early in 2017, initiated early production in June, tripled output by year's end and already have exported two million barrels with an estimated value of US$ 100 million - more than twice the investment to date," said DNO's executive chairman Bijan Mossavar-Rahmani. "And we have only started to appraise and develop this field which continues to surprise to the upside," he added.
DNO said a total of six Peshkabir wells will be drilled this year with field production expected to reach 30,000 bopd by summer and it will continue to ramp up in the second half of the year.
At the Tawke field, plans are being finalised with partner Genel Energy plc to drill four wells in 2018, in addition to the currently drilling Tawke-48 well slated for completion by end-February.
Elsewhere in Kurdistan, DNO has re-entered and sidetracked the Hawler-1 well to appraise the Benenan heavy oil field in the Erbil license, achieving a technical milestone with the first ever multilateral well and the first ever dual completion in Kurdistan. Testing will commence shortly, and if successful, will be followed by additional wells.
The company received 12 monthly Kurdistan export payments during 2017 totalling $380 million net to DNO. The landmark August 2017 receivables settlement agreement, which increased DNO's stake in the Tawke and Peshkabir fields from 55 percent to 75 percent plus three percent of gross license revenues over five years, contributed to higher export payments.
Operational cash flow more than tripled to $339 million in 2017 and DNO exited the year with a net cash position of $30 million versus net debt of $139 million at end-2016.