DNO Announces Sharp Drop in 2020 Budget; Releases 2019 Annual Report and Annual Statement of Reserves and Resources

Oslo, 18 March 2020 - DNO ASA, the Norwegian oil and gas operator, today announced a 30 percent or USD 300 million reduction in its 2020 budget to shore up its balance sheet in the face of unprecedented market convulsions and plunging oil prices triggered by the coronavirus pandemic.

Steps have already been taken to suspend most discretionary drilling and capital projects across the Company’s portfolio and to focus instead on key projects in its core operating area in the Kurdistan region of Iraq.

The Company has also initiated staff reductions, cancelled the first half 2020 dividend, discussed modalities for cost reductions with its suppliers and contractors and frozen new ventures.

“We demonstrated our resilience and nimbleness during the regional geopolitical pandemonium triggered by ISIS some five years ago and can ramp up operations quickly once the coronavirus is put back in the bottle,” said Bijan Mossavar-Rahmani, DNO’s Executive Chairman.

Meanwhile, among the Company’s priorities is completion of testing of the Baeshiqa-2 exploration well in Kurdistan starting late March. The Company previously reported that the well flowed light oil and sour gas to surface and that testing of remaining reservoirs would resume following a well workover program, now completed, to assess commerciality.

DNO also remains committed to complete its USD 100 million Peshkabir-to-Tawke gas capture, transport and reinjection project in Kurdistan to reduce CO₂ emissions at the Peshkabir field and boost oil recovery at the Tawke field. Gas reinjection will commence in early April.

But the Company’s exploration, appraisal and development drilling campaign, historically the most active among the international oil companies in Kurdistan, has been scaled back, as both DNO and contractor staff movements and rotations have been impacted by border closings, quarantines and other coronavirus travel restrictions. 

By the end of March, the number of active drilling rigs deployed by DNO in Kurdistan will drop to two (including one workover rig) from six (two workover rigs) at the beginning of the year. Production at the Tawke and Peshkabir fields has already started to slide to below 115,000 barrels of oil per day.

DNO’s ability to maintain its level of spending has also been strained by interruptions and delays to monthly payments for its oil exports from Kurdistan; the last payment received in January covered September 2019 exports.