DNO, the Middle East focused oil and gas operator, reported a third quarter net loss of US$96 million due to writedowns and lower oil prices although revenues rose 33 per cent.
The Norwegian company recorded quarterly revenues of $227 million as production averaged 99,300 barrels of oil equivalent per day (boepd) on a company Working Interest (CWI) basis, up 22 percent year on year.
The quarterly earnings however were also affected by non-recurring items as well as lower oil prices and higher exploration expenses, the company said in a statement.
Financial results were impacted by impairment charges of $138 million, including $89 million for technical goodwill on the Brasse discovery (Norway) and $33 million for decommissioning of the Schooner and Ketch fields (United Kingdom).
In the Kurdistan region of Iraq, third quarter production at the Tawke license containing the DNO-operated Tawke and Peshkabir fields (shared 75-25 with partner Genel Energy plc) averaged 119,800 barrels of oil per day (bopd).
The company expects to exit the year with Tawke license production averaging 120,000 bopd and to maintain this rate into 2020. The Company recently reached a significant milestone of 300 million barrels of cumulative oil production from the Tawke and Peshkabir fields.
Activity remains high as the company continues to deliver its largest drilling campaign in its 48-year history with some 36 wells in 2019, of which 22 are development/infill wells and 14 exploration/appraisal wells.
DNO projects full-year operational spend of $620 million (post-tax), of which $454 million was spent through the end of the third quarter, including USD 244 million in Kurdistan and $210 million (post-tax) in the North Sea.
With $228 million in cash from operations during the third quarter, the company resumed its share buyback program and acquired 23 million shares at a cost of $35 million, lifting its overall stake to 58 million treasury shares, representing 5.35 percent of the total outstanding shares at end quarter. DNO also bought back an additional $17 million of FAPE01 bonds during the quarter.
DNO maintained its previously approved dividend distribution program with another semi-annual payment of NOK 0.20 per share to be made on 4 November 2019.
“We continue to deliver across a range of operating and financial targets even as we paused this quarter for early spring cleaning of our balance sheet,” said DNO’s executive chairman Bijan Mossavar-Rahmani. “Given global headwinds, we are budgeting at the low end of the industry’s Brent price range of $60-70 per barrel,” he added.
CWI production during the third quarter included 84,400 bopd from Kurdistan and 14,900 boepd from North Sea assets acquired earlier this year.
In 2019, nine wells were spud in Kurdistan through the end of the third quarter, with an additional ten wells planned for the fourth quarter. In the North Sea, 13 wells were spud through the end of the quarter, with an additional four wells planned for the fourth quarter, including DNO’s first operated exploration well, Canela, in the North Sea since 2007.
DNO exited the third quarter with a cash balance of $624 million in addition to $110 million in treasury shares and marketable securities.