Preliminary results third quarter 2004
According to the company's revised strategy, DNO maintained high exploration activity during the third quarter. DNO applies the successful efforts method in accounting for its oil and gas operations. As a consequence of this principle, DNO expensed approx. NOK 74 million in exploration costs incurred in the third quarter.
Despite high exploration expenses, the operating profit (EBIT) for the third quarter is improved and estimated at NOK 121 million, due to higher revenues from sale of petroleum products.
The exploration efforts in the third quarter resulted in an increase of approx. 6 million barrels in p+p net reserves to DNO.
In addition to high exploration expenses, DNO's third quarter profits are impacted by a loss from oil-price hedging of NOK 50 million, negative net finance of NOK 38 million mostly due to unrealized currency losses and increased tax expense of NOK 179 million mainly due to higher production.
As a consequence of the above items, DNO expects a net loss after tax of approx. NOK 96 million in the third quarter.
Extraordinary shareholders' meeting:
The Board of Directors of DNO ASA will call an extraordinary shareholders' meeting and propose to distribute approx. NOK 168 million in extraordinary dividend to its shareholders. The proposed dividend consists of approx. NOK 28 million in cash corresponding to NOK 0.5 per DNO share, and approx. NOK 140 million in the form of shares in Independent Oil Tools AS, corresponding to an approximate value of NOK 2.48 per DNO share.
Distributing the shares in IOT will make the underlying value more visible and DNO's shareholders may select to keep or to realize these values, as IOT will seek to be listed during 2005.
The extraordinary shareholders' meeting will be convened on 1 December 2004.
By distributing the shares in IOT AS, which holds a significant ownership position in Petrolia Drilling ASA, DNO will be reducing its activity within offshore and services. This is in line with the company's revised strategy of focusing on exploration and production of oil and gas.