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DNO, the Norwegian oil and gas company active in the Kurdistan region of Iraq, intends to step up its drilling campaign in the area after it returned to the black at an operating level last year, a turnround from a $174m loss in 2015.
The group, which operates the Tawke field in which London-listed Genel also has an interest, said it is starting to reinvest following two testing years of cost cutting. Companies active in the region have had to contend with a multitude of difficulties specific to the area over the last few years, on top of the slide in oil prices.
DNO said it plans to invest $100m this year, which would be spent on activities including four new production wells at Tawke. Three additional wells at Tawke are also being considered, the group said, to raise production above the current 115,000 barrels of oil per day.
The group swung back into profit at an operating level in 2016, posting earnings of $6m, although it made a net loss of $35.3m. This compared to a net loss of $212.3m in 2015. Revenues edged up to $201.3m from $187.4m a year earlier.
RBC Capital Markets analyst Al Stanton said DNO’s fourth quarter earnings were lower than expected, however. The group made a net loss of $31.2m in the final three months of the year versus a loss of $83.3m a year earlier. Revenues dropped to $41.7m from $54.5m during the same period in 2015.
DNO highlighted improved payments from the Kurdistan regional government last year, although others have highlighted a slippage in the payment timetable in recent months.
Alongside its full year figures, DNO on Thursday also released its annual reserves report which showed an increase in its so-called 2P reserves and 2C resources at the end of 2016, although estimates of reserves and resources at its key Tawke field were lower than at the end of 2015.