DNO, the Norwegian oil and gas operator controlled by UAE’s RAK Petroleum, plans to boost 2018 spending in norther Iraq’s Kurdistan region by 50 per cent after securing higher revenues and regular payments from the semi-autonomous government.
The Oslo-listed company swung to a fourth quarter net profit after the firm struck an agreement in August with the Kurdistan Regional Government to settle arrears. The agreement included an increase in DNO’s stake in Tawke license to 75 per cent by taking on the government’s 20 per cent stake. The UK’s Genel Energy is a partner with DNO in the Tawke license.
DNO, which will spend $250 million in Kurdistan in 2018, plans to drill four wells in 2018 in Tawke field in addition to the current well being drilled, the company said on Thursday. The company will fast track the development of the Peshkabir field to double production to 30,000 barrels per day by summer, with output to be boosted in the second half.
“We have only started to appraise and develop this field [Peshkabir] which continues to surprise to the upside," said DNO's executive chairman Bijan Mossavar-Rahmani.
Kurdistan made a number of agreements with oil and gas operators to settle arrears last year as it seeks to help increase production from the region. The government, though, suffered a setback last year after the central Iraq government took control of disputed oil fields following an independence referendum for the semi-autonomous region.
DNO said it received 12 monthly Kurdistan export payment in 2017 amounting to $380 million (versus $202 in 2016) following the August deal, helping it to boost its cash flow. The company ended 2017 with a net cash positon of $30m compared with a net debt of $139m at the end of 2016.
Fourth quarter net profit reached $30.6m compared with a $31.2m loss in a year-earlier period. Full year net profit stood at $495m versus a $35.3m loss a year earlier.
DNO’s total production averaged 113,530 barrel of oil equivalent per day in 2017, with 109,047 bpd coming from Kurdistan and the remaining from Oman.