DNO, Norwegian oil and gas operator, reported a slump in 2019 profit despite posting record revenues as production rose.
The company made a net profit of US$74 million and revenues of $971 million last year, DNO said in a statement. This compares with a net profit of $354 million in 2018 on revenues of $829 million.
Acquisitions and a record drilling campaign drove a 28 per cent year-on-year increase in the company’s working interest production to 104,800 barrels of oil equivalent per day (boepd), DNO said. The company did not share a reason for the drop in profit.
At the end of 2019, DNO had a cash balance of $486 million and $145 million in marketable securities. The cash balance excludes two delayed export payments totalling $107 million net to DNO received from the Kurdistan Regional Government in 2020. Last year, the company delivered its largest ever annual drilling program with 36 wells drilled or spudded across its portfolio, of which 24 were development/infill and 12 exploration/appraisal wells. Planned operational spend (capital and exploration expenditures plus lifting costs) will remain high in 2020 at $650 million.
In Kurdistan, gross production from the two fields in the DNO-operated Tawke license climbed to 124,000 barrels of oil per day (bopd) in 2019 (87,400 bopd CWI), up from 113,100 bopd in 2018 (79,700 bopd CWI).
Average production of 122,800 bopd in the fourth quarter of 2019 was up 3,000 bopd from the previous quarter. In November 2019, the company reported a discovery in its operated Baeshiqa license, with the well now undergoing a workover prior to resumption of acid stimulation and testing of remaining reservoirs to assess commerciality.
Through acquisition of Faroe Petroleum plc, the company added North Sea production of 17,400 boepd in 2019. Average production of 19,000 boepd in the fourth quarter of 2019 was up 4,100 boepd from the previous quarter.
Meanwhile, DNO was awarded 10 licenses in Norway’s Awards in Predefined Areas (APA) 2019 licensing round adding to the 87 licenses already held in Norway and 15 across the United Kingdom, the Netherlands and Ireland. Of these licenses, 28 are on production (13 fields) and the balance in various stages of evaluation, exploration and development.
The Peshkabir-to-Tawke gas gathering and reinjection project designed to increase oil recovery rates at Tawke while eliminating flaring at Peshkabir will be completed in spring 2020. Once completed, CO2 emissions from DNO’s operated Kurdistan fields are expected to drop to around 7 kilograms per barrel, compared to an industry average of about 9 kilograms per barrel in Norway and about 18 kilograms per barrel globally.
In January 2020, DNO completed a buyback program of up to 10 per cent of own shares, having acquired 108,381,415 shares at a weighted average price of NOK 10.61 per share (for a total cost of USD 129 million). The Board of Directors has called for an Extraordinary General Meeting later this month to seek shareholder approval to cancel the treasury shares.
The Board of Directors also plans to approve distribution of the next semi-annual dividend of NOK 0.20 per share in March 2020, following which DNO will have returned $200 million to shareholders since August 2018.