Could you give a brief account of 2010, Helge Eide?
We increased the overall oil production to the Company in 2010, and delivered a solid cash flow from operations. This is the key achievement in 2010. The increased production comes as a result of increased deliveries to the local market in Kurdistan, and still without export we were able deliver strong cash flow from these operations.
As the fields we are currently operating in Yemen are maturing we were anticipating a continuing decline in production from Yemen, but we are pleased to note that we managed to keep production at a higher level than expected. In Yemen we also concluded to commence the development of the Yaalen discovery in Block 47, which will add new production volumes from the country already next year. We re-commenced exploration drilling in the second half of the year and two of the wells discovered oil, one in Yemen and one in Kurdistan. More work is required to conclude the size and significance of these new discoveries which we plan to undertake in 2011.
Our exploration efforts in Mozambique have not paid out so far. We drilled one exploration well in 2010 and a second one in the first quarter of 2011. Unfortunately, no commercial discoveries were done in these wells. Dry wells are of course disappointing, but it is important for DNO as a fully fledge E&P company to have a broad portfolio, which includes exploration in new and virgin areas. All in all 2010 proved to be a good year to DNO and this comes as a result of dedicated and hard work from our organization.
How is the Company’s financial situation?
DNO improved its financial position during 2010. This was a combination of solid cash flow from operations, sale of treasury shares and new equity raised. At the turn of the year, DNO´s cash position had increased to around NOK 1.4 billion, an increase of around NOK 1.1 billion during the year. Our improved financial position gives the company a good financial platform for further growth going forward.
How does the unrest in the Middle East affect DNO’s activities?
The unrest in Yemen has not affected our operations. The safety of our employees is obviously DNO’s first priority, and we have currently higher focus on security measures both at our headquarters in Sana’a and also in the fields. We are keeping a close eye on the development of the situation and we have contingency plans which can be initiated if the situation detoriates. In Kurdistan we have not seen signs of the unrest which we have seen in the Middle-East, and the security situation has remained unchanged
What has caused the strong interest that media and investors are showing in DNO?
I think it has to do with the type of Company we are, where we have a more entrepeneural and untraditional approach both to the way, and where we operate. The fact that we have been a frontrunner in Kurdistan has probably also contributed to the high interest from media and the financial market.
How will you hope to sum up 2011?
The general outlook for DNO at the beginning of 2011 is positive. We have re-commenced export from the Tawke field in Kurdistan which enable the Company to fully utilize its production capacity. We are also currently undertaking an important test program of the Bastora discovery also in Kurdistan, which could form a basis for a new field development. On the top of this we are going to drill two very exciting exploration in this region.
In Yemen we will continue our work to maintain a highest possible production level until we get new production from the Yaalen field next year. We will also hope for successful outcomes from the exploration wells to be drilled this year in Yemen such that we can initiate new fast-track developments. In addition, we are continuously pursuing new business opportunities, with particular focus on onshore projects in the Middle-East and Africa region. We hope that these efforts will materilize in 2011 forming a platform for a more diversified growth going forward.
In summary I think that 2011 has the potential to be a “break-trough” year for DNO where we finally can fully capitalize on our past investments. This will create a solid platform for further growth and thus creating additional shareholder values in the years to come.