Oslo, 18 January 2021 – DNO ASA, the Norwegian oil and gas operator, today announced net production of 95,100 barrels of oil equivalent per day (boepd) across its portfolio in 2020, notwithstanding the sharp decline in planned spending to preserve cash following the market turmoil triggered by the Covid-19 pandemic.
Gross operated production from the Company’s flagship Tawke license in the Kurdistan region of Iraq, about evenly split between the Tawke and Peshkabir fields, averaged 110,300 barrels of oil per day (bopd) with 77,700 bopd net to DNO’s interest. Last year was the sixth consecutive year in which gross Tawke license production has averaged over 100,000 bopd.
“With higher oil prices and more visibility on Kurdistan export payments, DNO will ramp up drilling of new development wells at the Tawke license to as many eight this year from only one in 2020 and conduct multiple workovers on existing producing wells in our drive to maintain production above 100,000 bopd,” said Bijan Mossavar-Rahmani, DNO's Executive Chairman.
Monthly entitlement and override payments were withheld early in 2020 by the Kurdistan Regional Government (KRG) which was itself hit by lower oil revenues and economic dislocations caused by the pandemic. After a four-month hiatus, entitlement payments were resumed in March 2020 and override payments will resume in January 2021. The KRG has put a plan in place to make payments towards DNO’s arrears (USD 259 million) such that if Brent prices exceed USD 50 per barrel in any month, the incremental revenue will be shared 50-50 between the KRG and the Tawke license partners. Discussions continue to further improve the terms of recovery of the arrears.
In other developments, in mid-December 2020 the Tawke license passed the milestone of 350 million barrels of oil produced, including 300 million from the Tawke field and 50 million from the Peshkabir field. DNO operates and has a 75 percent stake in the Tawke license with partner Genel Energy plc holding the balance.
Production from DNO’s non-operated North Sea assets contributed another 17,300 boepd net to the Company’s interest in 2020, unchanged from a year earlier, following the drilling of three development wells and multiple well interventions across the 11 producing fields in Norway and the UK. The Company expects six to eight development wells will be spud in 2021.
Based on preliminary financial reporting, DNO received cash proceeds from oil and gas revenues and tax refunds of USD 835 million in 2020, including USD 376 million from Kurdistan (of which USD 197 million represented recovery of capital and operating expenses on the Tawke license) and USD 459 million from the North Sea (of which USD 236 million represented Norwegian and UK tax refunds). DNO’s operational spend last year totaled USD 515 million in line with previous guidance and the Company expects this figure to increase to USD 700 million this year based on currently sanctioned exploration and development projects.
Also according to preliminary figures, the Company exited 2020 with a cash balance of USD 475 million, essentially unchanged from the start of the year.
Between midyear 2020 and the end of the year, DNO captured, piped and reinjected a total of 2.4 billion cubic feet (bcf) of Peshkabir field gas which otherwise would have been flared into the Tawke field for pressure maintenance, leading to an estimated 200,000 barrels of incremental oil recovery and 400,000 barrels of reduced field water production. Another 0.3 bcf of gas were reinjected into the Peshkabir field itself.
This gas capture equates to a reduction of greenhouse gas emissions in 2020 of 160,000 tonnes of CO2 equivalent and halves the average carbon intensity of the Company’s operated production to approximately 7 kilograms CO2 equivalent for each barrel of oil equivalent produced (kg CO2e/boe). The figure is one-third the target set by a group of 12 of the world’s largest oil companies comprising the Oil and Gas Climate Initiative to reduce the average carbon intensity of their aggregated upstream oil and gas operations to between 20-21 kg CO2e/boe by 2025.
DNO will present its 2020 fourth quarter and full-year results on 11 February 2021.
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DNO ASA is a Norwegian oil and gas operator focused on the Middle East and the North Sea. Founded in 1971 and listed on the Oslo Stock Exchange, the Company holds stakes in onshore and offshore licenses at various stages of exploration, development and production in the Kurdistan region of Iraq, Norway, the United Kingdom, Netherlands, Ireland and Yemen.
This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.