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DNO Increases Oil Reserves, Shares Rise

Shares in DNO ASA, the Norwegian oil and gas operator, were trading up five percent on Monday afternoon following the company’s announcemnt that it has replaced 2018 production through additions to reserves, marking the second consecutive year in which the Company’s replacement of proven reserves reached or exceeded 100 percent of production.

“DNO’s stellar record of reserves replacement through the drill bit is a result of stepped up spending on our portfolio of quality assets coupled with rapid-fire execution,” said Bijan Mossavar-Rahmani, DNO’s Executive Chairman. “And the barrels we continue to add are among the lowest cost in the industry, anywhere,” he expounded.

Yearend 2018 Company Working Interest (CWI) proven (1P) reserves stood at 240 million barrels of oil (MMbbls), unchanged from yearend 2017 after adjusting for production and technical revisions. On a CWI proven and probable (2P) reserves basis, DNO replaced 98 percent of its 2018 production, exiting the year with CWI 2P reserves of 376 MMbbls (384 MMbbls in 2017).

At 2018 production rates, DNO’s 1P reserves life is 8.2 years and its 2P reserves life is 12.9 years.

Significantly, the Company’s 1P reserves replacement ratio (RRR) has reached or exceeded 100 percent in eight of the past ten years.

On a gross basis, at the Tawke license in the Kurdistan region of Iraq containing the Tawke and Peshkabir fields, yearend 2018 1P reserves stood at 348 MMbbls, unchanged from 2017 after adjusting for production of 41 MMbbls and upward technical revisions of 41 MMbbls. Tawke license 2P reserves stood at 502 MMbbls (513 MMbbls in 2017) and proven, probable and possible (3P) reserves at 697 MMbbls (880 MMbbls in 2017).

Broken down by field, Tawke field gross 1P reserves stood at 294 MMbbls (335 MMbbls in 2017), 2P reserves at 376 MMbbls (438 MMbbls in 2017) and 3P reserves at 477 MMbbls (588 MMbbls in 2017). Peshkabir field gross 1P reserves stood 54 MMbbls (13 MMbbls in 2017), 2P reserves at 126 MMbbls (75 MMbbls in 2017) and 3P reserves at 220 MMbbls (292 MMbbls in 2017).

International petroleum consultants DeGolyer and MacNaughton carried out the annual independent assessment of the Tawke license. The Company internally assessed the remaining licenses in its portfolio.

The 2018 Annual Statement of Reserves and Resources, prepared and published in accordance with Oslo Stock Exchange listing and disclosure requirements (Circular No. 1/2013), is attached and is also available on the Company’s website at www.dno.no.

(Sources: DNO, Yahoo!)

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DNO announces Higher Revenues, Profits, Production, Reserves

DNO ASA, the Norwegian oil and gas operator, today released its 2017 Annual Report and Accounts together with its 2017 Annual Statement of Reserves and Resources and reported improvements across key financial and operational metrics.

Annual 2017 revenues climbed to USD 347 million, up 72 percent from year earlier levels. Operating profit totaled USD 521 million, up from USD 6 million in 2016, with the recognition as other income of USD 556 million under the August 2017 Kurdistan Receivables Settlement Agreement.

Excluding the settlement agreement and non-cash impairments, operating profit in 2017 more than doubled to USD 72 million. And notwithstanding a doubling of operational spend to USD 259 million, the Company ended the year with a cash balance of USD 430 million.

Company Working Interest (CWI) production increased to 73,700 barrels of oil equivalent per day (boepd) from 69,200 boepd in 2016 (operated production in 2017 was 113,500 boepd, up from 112,600 boepd in 2016). Lifting costs last year averaged USD 3.6 per barrel of oil equivalent.

Iraqi Kurdistan

DNO’s production continues to be driven by the Tawke field in Kurdistan, where output in 2017 averaged 105,500 barrels of oil per day (bopd).

The adjacent Peshkabir field, brought on stream midyear, contributed another 3,600 bopd to bring total Tawke license production to 109,100 bopd in 2017. The Company plans to bolster production from the license with 10 new wells in 2018.

“We are committed this year to continue to outdrill, outproduce and outperform all other international companies in Kurdistan – combined,” said DNO’s Executive Chairman Bijan Mossavar-Rahmani.

At yearend 2017, DNO’s CWI 1P reserves climbed to 240 million barrels of oil equivalent (MMboe) from 219 MMboe at yearend 2016, after adjusting for production during the year, technical revisions and an increase in DNO’s operated stake in the Tawke license from 55 percent to 75 percent.

On a 2P basis, DNO’s CWI reserves stood at 384 MMboe (up from 368 MMboe) and on a 3P basis, DNO’s CWI reserves stood at 666 MMboe (up from 521 MMboe). DNO’s yearend 2017 CWI contingent resources (2C) were estimated at 99 MMboe, down from 161 MMboe at yearend 2016, following reclassification of certain contingent resources to reserves.

On a gross basis, at yearend 2017, 1P reserves at the Tawke license containing the Tawke and Peshkabir fields totaled 348 MMboe (353 MMboe at yearend 2016) after adjusting for production of 40 MMboe during the year and technical revisions; 2P reserves totaled 513 MMboe (536 MMboe at yearend 2016); 3P reserves totaled 880 MMboe (725 MMboe at yearend 2016) and 2C resources totaled 91 MMboe (211 MMboe at yearend 2016) following reclassification.

International petroleum consultants DeGolyer and MacNaughton carried out the annual independent assessment of the Tawke and Peshkabir fields. DNO internally evaluated the remaining assets.

(Source: DNO)

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Genel Updates on Oil Reserves

By John Lee.

Genel Energy has announced the completion of competent person’s reports (‘CPRs’) relating to the oil reserves and resources at Taq Taq, Bina Bawi, and Miran.

McDaniel and Associates have updated the CPR relating to the Taq Taq field (Genel 44% working interest, joint operator).

RPS Energy Consultants Ltd. (‘RPS’), as part of its work on the updated CPRs for the Bina Bawi and Miran West fields (Genel 100% and operator), has finalised its evaluation of the oil resources at both fields.

Murat Özgül (pictured), Chief Executive of Genel, said:

“The 40% replacement of 1P reserves at Taq Taq follows the success of well TT-29w, and reflects the stability in cash-generative production that we have seen from the field in the second half of 2017. The significant increase in high-value Bina Bawi 2C oil resources offers a tangible opportunity for near-term value creation.”

Taq Taq oil reserves

Taq Taq gross 2P reserves as of 31 December 2017 are estimated by McDaniel at 54.7 MMbbls, compared to 59.1 MMbbls as of 28 February 2017, with the difference being production in the intervening period, partly offset by a small upward technical revision.

The CPR results in a 12% reserves replacement for 2P and 40% reserves replacement at the higher confidence 1P level as a result of stabilising production and the integration of well TT-29w. A reconciliation from the reserves reported in the CPR released in February 2017 to the updated estimates in the CPR published today, is shown in the following table:

Gross oil reserves (MMbbls – McDaniel)

1P

2P

3P

28 February 2017

25.8

59.1

95.0

Production

(5.0)

(5.0)

(5.0)

Technical revisions

2.0

0.6

0.1

31 December 2017

22.8

54.7

90.1

Bina Bawi and Miran oil resources

Bina Bawi gross 2C light (c.45◦ API) oil resources as of 31 December 2017 are estimated by RPS at 37.1 MMbbls, compared to 13 MMbbls as of July 2013. The increase reflects higher recovery factors than initially estimated due to integrating learnings from analogue carbonate fields of similar oil quality. As the high-quality Bina Bawi oil is in close proximity to export infrastructure, the field represents a potentially attractive near-term development candidate for the Company.

Miran West gross 2C heavy (c.15◦ API) oil resources as of 31 December 2017 are estimated by RPS at 23.7 MMbbls, compared to 52 MMbbls as of April 2013. Volumes have reduced as RPS has adjusted its view on the oil water contact uncertainty range and also adjusted its view on reservoir properties, including data from MW-5 drilled in July 2013.

Because of field experience at Taq Taq, Genel management has taken the view that it is unlikely that any matrix will contribute to primary depletion at Miran and, as such, has taken a more conservative view and will only record 18.5 MMbbls of viable 2C contingent resources at the field.

Gross 2C Contingent Resources oil (MMbbls – RPS)

2013

31 December 2017

Bina Bawi

12.9

37.1

Miran West

52.0

23.7

Appendix

Summary of Contingent Resources – Development unclarified (Gross 100% working interest basis) attributable to the Bina Bawi and Miran West fields as of 31 December 2017.

Gross (100% WI) Contingent Resources

Gross (100% WI) Contingent Resources

Bina Bawi

Oil (MMbbls – RPS)

Miran West

Oil (MMbbls – RPS)

1C

15.2

1C

6.1

2C

37.1

2C

23.7

3C

78.4

3C

67.6

(Source: Genel Energy)

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“Good Quality” Oil Bearing Reservoirs found at Taq Taq

Genel Energy has announced an update on activity at the Taq Taq field (Genel 44% working interest).

The TT-29w well, which was drilled to appraise the northern flank of the Taq Taq field, has been completed as a producer after successfully encountering oil bearing Cretaceous reservoirs.

The well, which was drilled to a measured depth of 3,100 metres, encountered good quality oil bearing Cretaceous Shiranish and Kometan reservoirs. Six zones were subsequently tested over a 20 day period, with test rates of up to 6,400 bpd (40/64 inch choke) of 48° API oil delivered from individual zones.

Four of the five tests in the Shiranish produced dry oil, with one test tight. The Kometan reservoir test produced oil with a 40-50% water cut, confirming the oil water contact within the Kometan reservoir at this location in the field. TT-29w production has commenced from the Lower Shiranish reservoir at a rate of 3,200 bpd of dry oil on a restricted 24/64 inch choke, with the expectation that this rate will increase following an initial observation period.

The TT-29w well has proved a current oil water contact at this location on the northern flank of the field at a level at least 145 metres deeper than pre-drill estimates. Combined with the testing results, management is optimistic for the potential of the northern flank of the Taq Taq field.

However, it is too early to estimate what impact the well result will have on reserves, long-term production rates or future investment activity in the northern flank and the field as a whole.

In addition to the positive result from TT-29w, the TT-30 Pilaspi well was also successfully drilled as a producer in November and is currently producing around c.650 bopd. A further Pilaspi development well (TT-31) is planned before the end of 2017.

Gross production from the Taq Taq field is currently 15,100 bopd. Gross field production averaged 13,700 bopd in November 2017 and has averaged 18,300 bopd in 2017 to date.

(Source: Genel Energy)