DNO Guides 2020 Production and Spend

By John Lee.

DNO ASA, the Norwegian oil and gas operator, today provided production and spend guidance for the balance of the year ahead of its Annual General Meeting on Wednesday.

The Company reported that it has implemented the target 35 percent reductions across all spend categories to shrink its 2020 budget by USD 350 million to USD 640 million in response to turbulence and uncertainty in global oil and financial markets triggered by the coronavirus pandemic.

While strengthening its balance sheet, cutbacks in spend will throttle back 2020 Company Working Interest (CWI) production to a projected 88,000 barrels of oil equivalent per day (boepd), of which the Kurdistan region of Iraq will contribute 71,000 barrels of oil per day (bopd) and the North Sea 17,000 boepd. DNO's CWI production averaged 104,800 boepd last year.

In Kurdistan, DNO has reduced the number of rigs deployed in drilling, testing and workovers from five in 2019 and early 2020 to two; these two rigs are believed to be the only ones currently active in Kurdistan, down from an overall count approaching 20 last summer.

Of the two active rigs, one is drilling the Zartik-1 exploration well on the DNO-operated Baeshiqa license and the other is a Tawke license workover rig that will shortly be moved for scheduled maintenance. However, two third-party rigs have been warm stacked at the Tawke and Peshkabir fields and can quickly be mobilized if oil prices climb and export payments are regularized.

"Our cost cutbacks have been thoughtful and deliberate as we moved at warp speed to preserve cash and our balance sheet," said Bijan Mossavar-Rahmani, DNO's Executive Chairman. "The resulting reductions in oil production especially in Kurdistan are reversible with a restart of drilling," he added. "We have not lost reserves but simply parked a portion until the market recovers. And it will."

Gross production at the DNO-operated Tawke license in the Kurdistan region of Iraq containing the Tawke and Peshkabir fields, absent drilling of new infill wells to arrest natural field decline, is expected to average 100,000 bopd in 2020. This reflects a drop from 115,210 bopd in Q1 2020 to 100,000 bopd in Q2 2020 and 90,000 bopd over the balance of the year. The Tawke license exit rate at yearend 2020 is projected at 85,000 bopd absent new wells. Production continues to be split 55-45 between the Tawke and Peshkabir fields.

On a CWI basis, DNO's production in Kurdistan in the second half of the year is projected to average 65,000 bopd (81,220 bopd in Q1 2020 and an estimated 70,000 bopd in Q2 2020). CWI in North Sea operations will contribute another 17,000 boepd in the second half of 2020 (18,640 boepd in Q1 2020 and an estimated 17,000 boepd in Q2 2020).

Budget cuts and the newly announced Norwegian production caps are not expected to make a material change to DNO's 2020 North Sea projections; the majority of the Company's fields subject to the restrictions are not fully utilizing their previous higher production permits.

DNO ASA 2020 Projected Spend
Q1 2020 Q2 2020 Q3+Q4 2020 2020 2019
Actual Projected Projected Projected Actual
USD million USD million USD million USD million USD million
Exploration expenditures 34 36 65 135 187
Capital expenditures 78 37 40 155 339
Operating expenditures 59 49 92 200 237
Abandonment expenditures 17 7 7 31 23
Operational spend 187 129 204 520 786
Other 40 34 46 120 203
TOTAL 227 163 250 640 989

Note: Figures above are pre-tax (i.e., before exploration tax refund in Norway). The category
"Other" includes general and administrative expenditures (G&A), net interest payments and

(Source: DNO)

Genel Energy “Robust Financial Position”

Genel Energy has issued the following trading and operations update ahead of the Company's Annual General Meeting ('AGM'), which is being held today.

The information contained herein has not been audited and may be subject to further review.

Bill Higgs (pictured), Chief Executive of Genel, said:

"Despite the impact of COVID-19 creating a challenging environment for our industry, Genel's resilient business model and robust financial position, with over $100 million in net cash and an asset cashflow breakeven of $30/bbl, leaves us well placed to withstand the consequences of the pandemic as we continue to deliver our strategy.

"We have cut our cloth appropriately against this backdrop and halved our capital expenditure for 2020, protecting our balance sheet while still progressing Sarta, and positioning us to take advantage of growth opportunities as the landscape improves."

FINANCIAL PERFORMANCE

  • $98 million of cash proceeds received in the first four months of 2020
  • Cash of $404 million at 30 April 2020 ($391 million at 31 December 2019)
  • Net cash of $106 million at 30 April 2020 ($93 million at 31 December 2019)
  • Capital expenditure of $45 million in the first four months of 2020, with point forward expenditure cut significantly due to the impact of COVID-19
  • Final dividend of 10¢ per share (2019: 10¢ per share), a distribution of c.$27.8 million, to be paid to shareholders on the register on 29 May 2020, pending approval at today's AGM

OPERATING PERFORMANCE

  • Production in the first quarter of 2020 averaged 34,170 bopd, in line with January's guidance, guidance that has been removed following the decision to reduce investment to a level appropriate for the external environment
  • As well as impacting the oil price and hence investment plans for 2020, COVID-19 has provided operational challenges in relation to the movement of people and equipment. This has been less of a challenge for producing fields than pre-production assets, and the reduced work plan put in place in Q2 is progressing in line with expectations
  • Production by asset was as follows:
(bopd) Gross production

Q1 2020

Net production

Q1 2020

Tawke 61,490 15,370
Peshkabir 53,710 13,430
Taq Taq 12,200 5,370
Total 127,400 34,170

PRODUCTION ASSETS

  • Tawke PSC (25% working interest)
    • Production at the Tawke PSC averaged 115,200 bopd in the first quarter of 2020, with the Tawke field producing 61,490 bopd, and Peshkabir 53,710 bopd
    • Five development wells have been completed on the licence. Three drilling rigs were released as the 2020 activity plan was amended to reflect the external environment, while a workover rig continues to service production wells
    • A drilling rig has been stacked at each field and can be quickly mobilised when conditions warrant
  • Taq Taq PSC (44% working interest and joint operator)
    • Taq Taq gross field production averaged 12,200 bopd in the first quarter of 2020
    • The latest well on the northern flank of the field, TT-35, spud on 6 January, and completed in April. The well is currently adding c.600 bopd to production. This completed the planned drilling programme with the Sakson-605 rig, which has now been released
    • Activity at TaqTaq is focused onmaximisingcash generation. Appropriate for the external environment, it is not expected that there will be any further drilling activity in 2020

PRE-PRODUCTION ASSETS

  • Sarta (30% working interest)
    • Civil construction work at the Sarta field is nearing completion, with the facility build ongoing
    • Due to delays in the movement of people and equipment caused by the impact of COVID-19, first oil is now expected in Q4 2020, rather than Q3
    • Phase 1A represents a low-cost pilot development of the Mus-Adaiyah reservoirs, designed to recover 2P gross reserves estimated by Genel at 34 MMbbls
  • Qara Dagh (40% working interest and operator)
    • The QD-2 well was on track to spud in Q2 2020 prior to COVID-19 impacting supply chains and the movement of people in to the KRI
    • Due to ongoing uncertainty caused by COVID-19, Genel notified the KRG of the occurrence of a force majeure event preventing the Company from being able to perform its contractual obligations as scheduled
    • Work continues to take place to ensure that Genel is in the best possible position to start to drill the QD-2 well once external conditions improve and the force majeure event ceases
  • Bina Bawi (100% working interest and operator)
    • Genel received documentation in mid-April from the KRG following the commercial understanding reached in September 2019
    • Negotiations regarding this documentation are ongoing, as Genel continues to seek a viable and balanced commercial way forward for the development of Bina Bawi's gas and oil resources
  • Somaliland - SL10B13 block (100% working interest and operator)
    • A farm-out process relating to this highly prospective block began in Q4 2019, and a number of companies continue to assess the opportunity
  • Morocco - Sidi Moussa block (75% working interest and operator)
    • The farm-out campaign is set to begin in Q3 2020, aimed at bringing a partner onto the licence prior to considering further commitments

ESG

  • Zero lost time incidents and zero losses of primary containment in 2020 to date at Genel and TTOPCO operations
    • There has not been an LTI since 2015, with almost 12 million hours worked since the last incident
  • The Peshkabir-to-Tawke gas capture, transport and reinjection project to effectively end CO2 emissions at Peshkabir and boost oil recovery at Tawke is completed and undergoing commissioning
  • Multiple projects are ongoing to support local communities in the Kurdistan Region of Iraq, with activities in the Qara Dagh region continuing despite the force majeure event
  • Genel will issue a sustainability report in September 2020

OUTLOOK

  • Payments from the KRG are ongoing, with an updated payment mechanism put in place under which the KRG has committed to settling monthly sales invoices by the fifteenth day of the following month, as announced on 17 April 2020
    • $11.1 million received in April for oil sales during March 2020
  • 2020 capital expenditure reduced by c.50% from the top end of the original guidance range of $160-200 million and now expected to be just over $100 million, of which around half will be spent on the Tawke and Taq Taq PSCs, c.$30 million on Sarta, and c.$10 million on Qara Dagh
    • Point forward expenditure expected to be c.$60 million in 2020
  • Operating costs per barrel expected to be $3/bbl in 2020
  • Producing asset cashflow breakeven in 2020 at an oil price of less than $30/bbl, taking into account the 2020 capital expenditure programme and the updated payment mechanism
  • Opex: reduction of 10% compared to original guidance of c.$40 million
  • G&A: unchanged at c.$15 million (a reduction of c.20% from 2019)
  • Genel continues to analyse opportunities to repurchase bonds at a value-accretive price
  • The Company continues to actively pursue growth and is analysing opportunities to make value-accretive additions to the portfolio that are consistent with Genel's strategy

(Source: Genel Energy)

Genel Energy Update on Oil Reserves

Genel Energy plc has updated its oil reserves and resources across its portfolio.

Bill Higgs (pictured), Chief Executive of Genel, said:

"Genel's producing assets are profitable even at an oil price of $30/bbl and this, coupled with our robust balance sheet, supports investment in growth and the payment of a material dividend. The reduction of reserves at Tawke largely relates to production towards the end of the life of the field, and consequently our mid-term production outlook is materially unchanged and there is no reserves impact on our business plan.

"Our production funds an approved but flexible capital programme that, in the right market conditions, enables us to drill the wells necessary to evaluate the potential to convert the 2C oil resources in our portfolio, validated for the first time by ERCE, into reserves and production, boosting our cash generation potential."

Net oil reserves (MMbbls) 1P 2P 3P
31 December 2018 99.3 154.9 219.3
Production (13.2) (13.2) (13.2)
Technical revisions (17.2) (17.8) (11.2)
31 December 2019 68.8 123.8 194.9

International petroleum consultants DeGolyer and MacNaughton assess that on a gross basis, at the Tawke licence in the Kurdistan Region of Iraq containing the Tawke and Peshkabir fields, year-end 2019 1P reserves stood at 228 MMbbls, compared to 348 MMbbls at year-end 2018, after adjusting for production of 45 MMbbls and a downward technical revision of 75 MMbbls. Tawke licence 2P reserves stood at 400 MMbbls (502 MMbbls in 2018) and 3P reserves at 641 MMbbls (697 MMbbls in 2018).

Broken down by field, Tawke field gross 1P reserves stood at 176 MMbbls (294 MMbbls in 2018), 2P reserves at 284 MMbbls (376 MMbbls in 2018) and 3P reserves at 421 MMbbls (477 MMbbls in 2018). Peshkabir field gross 1P reserves stood 51 MMbbls (54 MMbbls in 2018), 2P reserves at 116 MMbbls (126 MMbbls in 2018) and 3P reserves at 220 MMbbls (unchanged from 2018).

Genel continues to take a conservative view of the Enhanced Oil Recovery project at the Tawke PSC, and will look to book reserves in relation to the project, which has the potential to increase recovery over the life of field, once enhanced performance has been demonstrated at the field.DeGolyer and MacNaughton has included23MMbbls of 2P and 45 MMbbls of 3P gross reserves, working interest portions of which are not included in the table above.

At Taq Taq, there is a minor technical downward revision of 2.1 MMbbls of gross 2P reserves associated with the unsuccessful TT-33 well, and these now total 44 MMbbls, with gross 1P reserves increasing by 3.3 MMbbls to 20.1 MMbbls, illustrating the continued strong underlying performance of the asset. McDaniel & Associates carried out the independent assessment of the Taq Taq licence.

Genel's gross 2P reserves estimate relating to Phase 1A of the Sarta development remains 34.3 MMbbls.

CONVERTING RESOURCES TO RESERVES

Net oil resources (MMbbls) 1C 2C 3C
31 December 2018 36.8 73.7 121.3
Technical revisions 29.7 78.3 224.5
31 December 2019 66.5 152 345.8

Following completion of the acquisition in 2019, Genel estimated gross resources at Sarta to be c.500 MMbbls. This potential has now been validated through an external audit conducted by ERCE, who has estimated a mid-case total recoverable oil resource of 593 MMbbls, of which 264 MMbbls is classified as 2C resource. Production performance in 2020, and the results of the upcoming three well campaign in 2021, will set out a roadmap for the conversion of these resources into reserves.

The Bina Bawi oil development has been certified by ERCE as 17.1 MMbbls of 2C resources, 13.6 MMbbls of which are expected to be converted into 2P reserves should a commercial agreement be reached and FID be taken on the first phase of the oil project.

At Qara Dagh the QD-2 well will test the crestal portion of the prospect which, based on a rigorous re-mapping exercise, has a mean prospective resource estimated by Genel at c.400 MMbbls. Genel estimates that the downdip segment tested by the QD-1 well defines a 2C resource of 47 MMbbls.

(Source: Genel)

DNO reports Record Revenues and Production

DNO ASA, the Norwegian oil and gas operator, today reported interim 2019 revenues of USD 971 million, the highest in the Company’s 48-year history, on the back of acquisitions and a record drilling campaign driving a 28 percent year-on-year increase in Company Working Interest (CWI) production to 104,800 barrels of oil equivalent per day (boepd). Net profit last year stood at USD 74 million.

The Company exited 2019 with a cash balance of USD 486 million and USD 145 million in marketable securities.  The cash balance excludes two delayed export payments totaling USD 107 million net to DNO received from the Kurdistan Regional Government in 2020.

In January 2020, DNO completed a buyback program of up to 10 percent of own shares, having acquired 108,381,415 shares at a weighted average price of NOK 10.61 per share (for a total cost of USD 129 million). The Board of Directors has called for an Extraordinary General Meeting later this month to seek shareholder approval to cancel the treasury shares.

The Board of Directors also plans to approve distribution of the next semi-annual dividend of NOK 0.20 per share in March 2020, following which DNO will have returned USD 200 million to shareholders since August 2018.

Last year, the Company delivered its largest ever annual drilling program with 36 wells drilled or spudded across its portfolio, of which 24 were development/infill and 12 exploration/appraisal wells. Planned operational spend (capital and exploration expenditures plus lifting costs) will remain high in 2020 at USD 650 million.

In Kurdistan, gross production from the two fields in the DNO-operated Tawke license climbed to 124,000 barrels of oil per day (bopd) in 2019 (87,400 bopd CWI), up from 113,100 bopd in 2018 (79,700 bopd CWI). Average production of 122,800 bopd in the fourth quarter of 2019 was up 3,000 bopd from the previous quarter. In November 2019, the Company reported a discovery in its operated Baeshiqa license, with the well now undergoing a workover prior to resumption of acid stimulation and testing of remaining reservoirs to assess commerciality.

Through acquisition of Faroe Petroleum plc, the Company added North Sea production of 17,400 boepd in 2019. Average production of 19,000 boepd in the fourth quarter of 2019 was up 4,100 boepd from the previous quarter. The Company was awarded 10 licenses in Norway’s Awards in Predefined Areas (APA) 2019 licensing round adding to the 87 licenses already held in Norway and 15 across the United Kingdom, the Netherlands and Ireland. Of these licenses, 28 are on production (13 fields) and the balance in various stages of evaluation, exploration and development.

The Peshkabir-to-Tawke gas gathering and reinjection project designed to increase oil recovery rates at Tawke while eliminating flaring at Peshkabir will be completed in spring 2020. Once completed, CO2 emissions from DNO’s operated Kurdistan fields are expected to drop to around 7 kilograms per barrel, compared to an industry average of about 9 kilograms per barrel in Norway and about 18 kilograms per barrel globally.

(Source: DNO)

“Successful Year” for Genel Energy

By John Lee.

Shares in Genel Energy closed Thursday up more than 4 percent after the company issued the following trading and operations update in advance of the Company’s full-year 2019 results, which are scheduled for release on 17 March 2020. The information contained herein has not been audited and may be subject to further review.

Bill Higgs (pictured), Chief Executive of Genel, said:

2019 was a successful year for Genel, and we continue to deliver on our promises. We increased our highly cash-generative production in line with guidance, paid a material dividend, grew our operating capabilities, and added new assets to the portfolio that will bear fruit in 2020.

“Our ongoing cash generation, with confidence of regular payments and in the security of the Kurdistan Region of Iraq, means that it is business as usual and our investment plans are moving forward at pace. This increasing investment in our growth assets is more than covered by expected free cash flow, and will see production diversify and increase as Sarta comes onstream in the summer, with enough remaining to underpin an increase in our already significant dividend.

FINANCIAL PERFORMANCE

  • $317 million of cash proceeds were received in 2019 (2018: $335 million)
  • Capital expenditure of $161 million (2018: $95 million), in line with initial guidance, as spending increased on growth assets
  • Free cash flow (‘FCF’) of $99 million in 2019, pre dividend payment
    • Cash proceeds and FCF were impacted by the non-receipt of $54 million in payments from the Kurdistan Regional Government (‘KRG’) relating to export sales in August and September 2019, due in November and December
    • Pro-forma FCF in 2019 was $153 million (2018: $164 million), or $0.55 per share
  • $26 million of outstanding payments from the KRG, constituting the full amount in respect to export sales in August 2019, has subsequently been received in 2020
  • Dividends of $42 million declared in 2019
    • Maiden dividend of $27 million (10¢ per share) paid in June 2019
    • A further $15 million distributed (5¢ per share) in January 2020
  • Cash of $387 million at 31 December 2019 ($334 million at 31 December 2018)
  • Net cash of $90 million at 31 December 2019 (net cash of $37 million at 30 December 2018)

OPERATING PERFORMANCE

  • 2019 net production averaged 36,250 bopd (2018: 33,690 bopd), in line with guidance and an increase of 8% on the prior year
  • Q4 averaged 35,410 bopd, an increase from 34,720 bopd in Q3
  • 19 new wells were brought onto production in 2019 across all assets
  • Production by asset was as follows:
(bopd) Gross production

2019

Net production

2019

Net production

2018

Tawke PSC 123,940 30,990 28,260
Taq Taq 11,960 5,260 5,430
Total 135,900 36,250 33,690

PRODUCTION ASSETS

  • Tawke PSC (25% working interest)
    • Tawke PSC gross production averaged 123,940 bopd, of which Peshkabir contributed 55,190 bopd
    • Production in Q4 2019 averaged 122,800 bopd, of which Peshkabir contributed 58,910 bopd
    • There will be an active drilling campaign in 2020 on the Tawke field, aiming to minimise decline rates
    • At Peshkabir, the P-12 well is currently appraising the eastern flank of the field, and is set to complete shortly
  • Taq Taq PSC (44% working interest and joint operator)
    • Taq Taq gross field production averaged 11,960 bopd in 2019
    • Production in Q4 2019 averaged 10,703 bopd
    • Following the successful drilling of the TT-34 well, which has now entered production at over 2,000 bopd with 20/64″ choke, production at Taq Taq has averaged c.12,800 bopd in the year to date
    • The latest well on the northern flank of the field, TT-35, spud on 6 January. This completes the drilling programme with the Sakson-605 rig
    • Further activity at Taq Taq is focused on maximising cash generation, with the optimised cost structure and 2020 work programme, which could see up to six wells drilled, under review

PRE-PRODUCTION ASSETS

  • Sarta (30% working interest)
    • Civil construction work at the Sarta field is continuing on schedule, with flowlines laid and buried and foundations in place for oil storage tanks, andGenel expects production to start in the summerof 2020
    • Phase 1A represents a low-cost pilot development of the Mus-Adaiyah reservoirs, designed to recover 2P gross reserves estimated by Genel at 34 MMbbls
    • Unrisked gross mid case resources relating to the Mus-Adaiyah reservoir are estimated by Genel at c.150 MMbbls, with overall unrisked gross P50 resources currently estimated by the Company at c.500 MMbbl
  • Qara Dagh (40% working interest and operator)
    • Civil construction works are progressing in preparation for the upcoming drilling operations, and the well pad and camp are on schedule for completion by the end of January
    • Environmental permits were granted in December 2019
    • The well will test the structural crest 10 km to the north-west of the QD-1 well, which tested sweet, light oil from Cretaceous carbonates
    • The QD-2 well is on track to spud in Q2 2020
    • Unrisked gross mean resources at Qara Dagh are currently estimated by Genel at c.200 MMbbls
  • Bina Bawi (100% working interest and operator)
    • Negotiations between Genel and the Kurdistan Regional Government (‘KRG’) regarding commercial terms for the gas and oil development at Bina Bawi made significant progress in the third quarter of 2019, resulting in an understanding on commercial terms for a staged and integrated oil and gas development being reached
    • Genel is now waiting to receive draft legal agreements reflecting this understanding
    • Genel is continuing the necessary readiness work required to enable rapid progress towards gas and oil developments upon receipt of signed documents
  • Somaliland – SL10B13 block (100% working interest and operator)
    • A farm-out process relating to this highly prospective block began in Q4 2019, with Stellar Energy Advisors appointed to run the process. A number of companies are now assessing the opportunity
    • Genel plans to conclude the farm-out process in H1 2020, aiming to minimise the cost to the Company of a well that could be spud in 2021
  • Morocco – Sidi Moussa block (75% working interest and operator)
    • The farm-out campaign is set to begin in Q2 2020, aimed at bringing a partner onto the licence prior to considering further commitments

ESG

  • Safety remains a priority for the Company, and our focus on this has led to zero lost time incidents (‘LTI’) and zero losses of primary containment in 2019 at Genel operations
    • There has not been an LTI since 2015, with over 11 million hours worked since the last incident
  • The operator of the Tawke PSC expects routine flaring to be eliminated on the licence in March 2020, with gas from the Peshkabir field set to be reinjected into the Tawke field in order to improve long-term reserves recovery
  • The search for a permanent Chairman is well progressed

OUTLOOK AND 2020 GUIDANCE

  • Net production in 2020 is expected to be close to Q4 2019 levels of 35,410 bopd, with an exit rate c.10% higher than this due to the expected addition of production from Sarta
    • Genel expects to drill over 20 producing wells in 2020
  • 2020 capital expenditure is expected to be $160-200 million, of which $120-150 million will be cost recoverable spend on assets on production in 2020. Other spend includes:
    • c.$35-40 million on the Qara Dagh 2 well
    • Under $10 million maintenance expenditure at Bina Bawi and Miran. Capital expenditure expectations for Bina Bawi in 2020 will be updated once legal agreements with the KRG have been signed
    • Under $2 million on African exploration assets
  • Operating costs per barrel expected to be $3/bbl, amongst the lowest in the industry
  • Opex: c.$40 million
  • G&A: c.$15 million
  • The Company expects full recovery of outstanding payments in Q1, and for regular payments to resume, as they had since September 2015
  • The Company continues to actively pursue growth and is analysing numerous opportunities to make value-accretive additions to the portfolio, but will only proceed with opportunities that fit our strict strategic criteria
  • Genel expects to generate c.$100 million in free cash flow, pre-dividend payments, in 2020
    • Given the ongoing strength of cash generation, confidence in the regularity of payments from the KRG, and the positive outlook for the Company, Genel reaffirms its commitment to growing the dividend

(Source: Genel Energy)

DNO Production Increases

DNO ASA, the Norwegian oil and gas operator, today announced a 29 percent year-on-year increase in its net Company Working Interest (CWI) production in 2019 to 104,800 barrels of oil equivalent per day (boepd) on the back of acquisitions and a record drilling campaign.

In the Kurdistan region of Iraq, production from the two fields in the Tawke license climbed from 113,100 barrels of oil per day (bopd) in 2018 (79,700 bopd CWI) to 124,000 bopd in 2019 (87,400 bopd CWI). Production of 122,800 bopd in the fourth quarter of 2019 was up 3,000 bopd from the previous quarter. The Company is operator of the Tawke license with a 75 percent interest.

At Tawke, 2019 production stood at 68,800 bopd, with wells drilled last year contributing 13 percent of field production at yearend. At Peshkabir, 2019 production stood at 55,200 bopd, with wells drilled in 2019 contributing 40 percent of field production at yearend.

Even though Tawke is now a mature field, we are continuously finding ways to slow its decline while teasing additional production from the newer Peshkabir field, all the while probing for other opportunities in Kurdistan,” said DNO’s Executive Chairman Bijan Mossavar-Rahmani.

Elsewhere in Kurdistan, DNO reported a discovery in the Baeshiqa-2 exploration well last November after flowing variable rates of light oil and sour gas to surface from the upper part of Triassic Kurra Chine B reservoir following acid stimulation. Further testing of this and several other Jurassic and Triassic zones will determine the next steps towards appraisal and assessment of commerciality. DNO holds a 32 percent interest and operatorship of the Baeshiqa license.

Meanwhile, the Peshkabir-to-Tawke gas injection project designed to increase oil recovery rates at Tawke while eliminating flaring at Peshkabir will be completed in March 2020. Once completed, CO2 emissions from DNO’s operated fields will average 7 kilograms per barrel of oil equivalent (boe) produced, compared to an average of 9 kilograms per boe on the Norwegian Continental Shelf and a global average of 18 kilograms per boe.

DNO retained a strong cash balance of USD 480 million at yearend 2019 plus USD 144 million in marketable securities. Following a delay in export payments last month from the Kurdistan Regional Government to oil operators, DNO has since yearend received payment for its August oil sales totaling USD 52 million net to the Company.

(Source: DNO)

Genel Energy Production Rises; Shares Up

Shares in Genel Energy closed up nearly 7 percent on Friday after the company reported increased production in its operations update for the third quarter and first nine months of 2019. The information contained herein has not been audited and may be subject to further review.

Bill Higgs (pictured), Chief Executive of Genel, said:

We continue to deliver on our strategy. Robust production is generating material free cash flow, which we are recycling into low-risk and quick returning projects, with good progress made on delivering key milestones on schedule for both Sarta and Qara Dagh.

“Rapid payback from our low break-even assets gives us resilience and significant flexibility in regard tofuture capital allocation. The sustainability of our cash-generation provides opportunities to deliver material shareholder value through investing in growth and increasing returns to shareholders.

FINANCIAL PERFORMANCE

  • $287 million of cash proceeds received as of 30 September 2019, of which $120 million was received in Q3
  • Free cash flow of $121 million in the first nine months of 2019,with capital expenditure of $110 million
  • Cash of $413 million at 30 September 2019 ($281 million at 30 September 2018)
  • Net cash of $115 million at 30 September 2019 (net debt of $16 million at 30 September 2018)

OPERATING PERFORMANCE

  • Net production averaged 36,530 bopd in the first nine months of 2019, an increase of 12% year-on-year, in line with guidance
  • Production in Q3 averaged34,720 bopd (33,700 bopd in Q3 2018)
  • 11 wells have been placed on production in 2019, with a further five wells expected to add to production in the remainder of the year
  • Production and sales by asset during Q3 2019 were as follows:

PRODUCTION ASSETS

  • Tawke PSC (Genel 25% working interest)
    • Tawke PSC production averaged 119,760 bopd in Q3 (113,100 bopd in Q3 2018), including a contribution of 51,940 bopd from the Peshkabir field
    • Production was impacted by a workover of the P-2 well and side-track of the P-3 well at the Peshkabir field, with the latter well expected to come onstream shortly
    • The Tawke-57A deep well to appraise the Jurassic was spud in August 2019 with testing to commence shortly. The Tawke-59 Cretaceous well spud in October 2019 and is expected to come on production later this month, with two Jeribe wells, Tawke-61 and Tawke-62 also set to be placed on production shortly
    • Four additional Jeribe wells are planned to spud by year-end
    • The operator expects to exit the year with Tawke licence production averaging 120,000 bopd and to maintain this rate into 2020
  • Taq Taq PSC (Genel 44% working interest and joint operator)
    • Taq Taq field production averaged 10,870 bopd in Q3 2019 (12,200 bopd in Q3 2018)
    • Following the successful completion of the TT-19 well, which is currently flowing at a rate of c.1,500 bopd, current production from the Taq Taq field is just under 11,000 bopd
    • The TT-34 well is currently drilling and is scheduled to complete later this month. The rig will then move to drill TT-35, which is set to spud in December and is targeting production from the northern flank of the field

PRE-PRODUCTION ASSETS

  • Sarta (Genel 30% working interest)
    • Civil construction work at the Sarta field completed on schedule in October 2019, and work on the construction of the 20,000 bopd central processing facility (‘CPF’) has now begun
    • Commissioning of the CPF and production are on track to begin in the middle of 2020
    • Phase 1A represents a low cost pilot development of the Mus-Adaiyah reservoirs, designed to recover 2P gross reserves of 34 MMbbls
    • Unrisked gross mid case resources relating to the Mus-Adaiyah reservoir only are estimated by Genel at c.150 MMbbls, with overall unrisked gross P50 resources currently estimated by the Company at c.500 MMbbls
  • Qara Dagh (Genel 40% working interest and operator)
    • Genel has signed a contract with Parker Drilling for the drilling of the QD-2 well, and civil construction works are underway in preparation for the upcoming drilling operations
    • The well will test the structural crest 10 km to the north-west of the QD-1 well, which tested sweet, light oil from Cretaceous carbonates
    • The QD-2 well is on track to spud in H1 2020
    • Unrisked gross mean resources at Qara Dagh are currently estimated by Genel at c.200 MMbbls
  • Bina Bawi (Genel 100% and operator)
    • Negotiations between Genel and the Kurdistan Regional Government continue to progress regarding commercial terms for the gas and oil development at Bina Bawi
    • In parallel with these negotiations, Genel is completing the necessary readiness work required to enable rapid progress towards gas and oil developments upon agreement of the commercial terms
    • Genel is confident of a positive outcome to these commercial discussions
  • Somaliland
    • Onshore Somaliland, Stellar Energy Advisors has been appointed to run the farm-out process relating to the SL10B13 block (Genel 75% working interest, operator)
    • Interpretation of the 2018 2D seismic data together with basin analysis has identified multiple stacked prospects, with each of them estimated to have resources of c.200 MMbbls
    • A further program of surface oil seep sampling and analysis reiterates the presence of a working petroleum system on the block
    • It is estimated that a well designed to test multiple stacked prospects could be drilled for c.$30 million gross
  • Morocco
    • On the Sidi Moussa block offshore Morocco (Genel 75% working interest, operator), processing of the multi-azimuth broadband 3D seismic survey acquired in 2018 over the prospective portions of the block is nearing completion
    • The farm-out campaign is on track to begin in Q1 2020, aimed at bringing a partner onto the licence prior to considering further commitments

OUTLOOK AND 2019 GUIDANCE

  • Net production guidance in 2019 maintained at close to Q4 2018 levels of 36,900 bopd
  • 2019 capital expenditure guidance maintained towards the top end of the $150-170 million range
  • Interim dividend of 5¢ per share to be paid on 8 January 2020 to shareholders on the register as of 13 December 2019
    • Given the ongoing strength of cash generation and the positive outlook for the Company, Genel reaffirms its commitment to growing the dividend
  • The Company continues to actively pursue growth and is assessing opportunities to make value-accretive additions to the portfolio

(Source: Genel Energy)

Genel Energy Production Rises; Shares Up

Shares in Genel Energy closed up nearly 7 percent on Friday after the company reported increased production in its operations update for the third quarter and first nine months of 2019. The information contained herein has not been audited and may be subject to further review.

Bill Higgs (pictured), Chief Executive of Genel, said:

We continue to deliver on our strategy. Robust production is generating material free cash flow, which we are recycling into low-risk and quick returning projects, with good progress made on delivering key milestones on schedule for both Sarta and Qara Dagh.

“Rapid payback from our low break-even assets gives us resilience and significant flexibility in regard tofuture capital allocation. The sustainability of our cash-generation provides opportunities to deliver material shareholder value through investing in growth and increasing returns to shareholders.

FINANCIAL PERFORMANCE

  • $287 million of cash proceeds received as of 30 September 2019, of which $120 million was received in Q3
  • Free cash flow of $121 million in the first nine months of 2019,with capital expenditure of $110 million
  • Cash of $413 million at 30 September 2019 ($281 million at 30 September 2018)
  • Net cash of $115 million at 30 September 2019 (net debt of $16 million at 30 September 2018)

OPERATING PERFORMANCE

  • Net production averaged 36,530 bopd in the first nine months of 2019, an increase of 12% year-on-year, in line with guidance
  • Production in Q3 averaged34,720 bopd (33,700 bopd in Q3 2018)
  • 11 wells have been placed on production in 2019, with a further five wells expected to add to production in the remainder of the year
  • Production and sales by asset during Q3 2019 were as follows:

PRODUCTION ASSETS

  • Tawke PSC (Genel 25% working interest)
    • Tawke PSC production averaged 119,760 bopd in Q3 (113,100 bopd in Q3 2018), including a contribution of 51,940 bopd from the Peshkabir field
    • Production was impacted by a workover of the P-2 well and side-track of the P-3 well at the Peshkabir field, with the latter well expected to come onstream shortly
    • The Tawke-57A deep well to appraise the Jurassic was spud in August 2019 with testing to commence shortly. The Tawke-59 Cretaceous well spud in October 2019 and is expected to come on production later this month, with two Jeribe wells, Tawke-61 and Tawke-62 also set to be placed on production shortly
    • Four additional Jeribe wells are planned to spud by year-end
    • The operator expects to exit the year with Tawke licence production averaging 120,000 bopd and to maintain this rate into 2020
  • Taq Taq PSC (Genel 44% working interest and joint operator)
    • Taq Taq field production averaged 10,870 bopd in Q3 2019 (12,200 bopd in Q3 2018)
    • Following the successful completion of the TT-19 well, which is currently flowing at a rate of c.1,500 bopd, current production from the Taq Taq field is just under 11,000 bopd
    • The TT-34 well is currently drilling and is scheduled to complete later this month. The rig will then move to drill TT-35, which is set to spud in December and is targeting production from the northern flank of the field

PRE-PRODUCTION ASSETS

  • Sarta (Genel 30% working interest)
    • Civil construction work at the Sarta field completed on schedule in October 2019, and work on the construction of the 20,000 bopd central processing facility (‘CPF’) has now begun
    • Commissioning of the CPF and production are on track to begin in the middle of 2020
    • Phase 1A represents a low cost pilot development of the Mus-Adaiyah reservoirs, designed to recover 2P gross reserves of 34 MMbbls
    • Unrisked gross mid case resources relating to the Mus-Adaiyah reservoir only are estimated by Genel at c.150 MMbbls, with overall unrisked gross P50 resources currently estimated by the Company at c.500 MMbbls
  • Qara Dagh (Genel 40% working interest and operator)
    • Genel has signed a contract with Parker Drilling for the drilling of the QD-2 well, and civil construction works are underway in preparation for the upcoming drilling operations
    • The well will test the structural crest 10 km to the north-west of the QD-1 well, which tested sweet, light oil from Cretaceous carbonates
    • The QD-2 well is on track to spud in H1 2020
    • Unrisked gross mean resources at Qara Dagh are currently estimated by Genel at c.200 MMbbls
  • Bina Bawi (Genel 100% and operator)
    • Negotiations between Genel and the Kurdistan Regional Government continue to progress regarding commercial terms for the gas and oil development at Bina Bawi
    • In parallel with these negotiations, Genel is completing the necessary readiness work required to enable rapid progress towards gas and oil developments upon agreement of the commercial terms
    • Genel is confident of a positive outcome to these commercial discussions
  • Somaliland
    • Onshore Somaliland, Stellar Energy Advisors has been appointed to run the farm-out process relating to the SL10B13 block (Genel 75% working interest, operator)
    • Interpretation of the 2018 2D seismic data together with basin analysis has identified multiple stacked prospects, with each of them estimated to have resources of c.200 MMbbls
    • A further program of surface oil seep sampling and analysis reiterates the presence of a working petroleum system on the block
    • It is estimated that a well designed to test multiple stacked prospects could be drilled for c.$30 million gross
  • Morocco
    • On the Sidi Moussa block offshore Morocco (Genel 75% working interest, operator), processing of the multi-azimuth broadband 3D seismic survey acquired in 2018 over the prospective portions of the block is nearing completion
    • The farm-out campaign is on track to begin in Q1 2020, aimed at bringing a partner onto the licence prior to considering further commitments

OUTLOOK AND 2019 GUIDANCE

  • Net production guidance in 2019 maintained at close to Q4 2018 levels of 36,900 bopd
  • 2019 capital expenditure guidance maintained towards the top end of the $150-170 million range
  • Interim dividend of 5¢ per share to be paid on 8 January 2020 to shareholders on the register as of 13 December 2019
    • Given the ongoing strength of cash generation and the positive outlook for the Company, Genel reaffirms its commitment to growing the dividend
  • The Company continues to actively pursue growth and is assessing opportunities to make value-accretive additions to the portfolio

(Source: Genel Energy)

DNO Shares Down 7.5%

By John Lee.

Shares in DNO ASA, the Norwegian oil and gas operator, were trading down 7.5 percent on Thursday morning, after the company reported a net loss for the third quarter.

The company reported what it described as strong third quarter revenues of USD 227 million, up 33 percent from a year earlier, on the back of solid production averaging 99,300 barrels of oil equivalent per day (boepd) on a Company Working Interest (CWI) basis, up 22 percent year on year.

In its statement, the company added:

Notwithstanding strong underlying performance, 2019 third quarter results were impacted by non-recurring items as well as lower oil prices and higher exploration expenses, resulting in a net loss of USD 96 million.

In the Kurdistan region of Iraq, third quarter production at the Tawke license containing the DNO-operated Tawke and Peshkabir fields (shared 75-25 with partner Genel Energy plc) averaged 119,800 barrels of oil per day (bopd). The Company expects to exit the year with Tawke license production averaging 120,000 bopd and to maintain this rate into 2020. The Company recently reached a significant milestone of 300 million barrels of cumulative oil production from the Tawke and Peshkabir fields.

Activity remains high as the Company continues to deliver its largest drilling campaign in its 48-year history with some 36 wells in 2019, of which 22 are development/infill wells and 14 exploration/appraisal wells. DNO projects full-year operational spend of USD 620 million (post-tax), of which USD 454 million was spent through the end of the third quarter, including USD 244 million in Kurdistan and USD 210 million (post-tax) in the North Sea.

Financial results were impacted by impairment charges of USD 138 million, including USD 89 million for technical goodwill on the Brasse discovery (Norway) and USD 33 million for decommissioning of the Schooner and Ketch fields (United Kingdom).

With USD 228 million in cash from operations during the third quarter, the Company resumed its share buyback program and acquired 23 million shares at a cost of USD 35 million, lifting its overall stake to 58 million treasury shares, representing 5.35 percent of the total outstanding shares at end quarter. DNO also bought back an additional USD 17 million of FAPE01 bonds during the quarter.

DNO maintained its previously approved dividend distribution program with another semi-annual payment of NOK 0.20 per share to be made on 4 November 2019.

“We continue to deliver across a range of operating and financial targets even as we paused this quarter for early spring cleaning of our balance sheet,” said DNO’s Executive Chairman Bijan Mossavar-Rahmani. “Given global headwinds, we are budgeting at the low end of the industry’s Brent price range of USD 60-70 per barrel,” he added.

CWI production during the third quarter included 84,400 bopd from Kurdistan and 14,900 boepd from North Sea assets acquired earlier this year.

In 2019, nine wells were spud in Kurdistan through the end of the third quarter, with an additional ten wells planned for the fourth quarter. In the North Sea, 13 wells were spud through the end of the quarter, with an additional four wells planned for the fourth quarter, including DNO’s first operated exploration well, Canela, in the North Sea since 2007.

DNO exited the third quarter with a cash balance of USD 624 million in addition to USD 110 million in treasury shares and marketable securities.

(Source: DNO)

DNO Shares Down 7.5%

By John Lee.

Shares in DNO ASA, the Norwegian oil and gas operator, were trading down 7.5 percent on Thursday morning, after the company reported a net loss for the third quarter.

The company reported what it described as strong third quarter revenues of USD 227 million, up 33 percent from a year earlier, on the back of solid production averaging 99,300 barrels of oil equivalent per day (boepd) on a Company Working Interest (CWI) basis, up 22 percent year on year.

In its statement, the company added:

Notwithstanding strong underlying performance, 2019 third quarter results were impacted by non-recurring items as well as lower oil prices and higher exploration expenses, resulting in a net loss of USD 96 million.

In the Kurdistan region of Iraq, third quarter production at the Tawke license containing the DNO-operated Tawke and Peshkabir fields (shared 75-25 with partner Genel Energy plc) averaged 119,800 barrels of oil per day (bopd). The Company expects to exit the year with Tawke license production averaging 120,000 bopd and to maintain this rate into 2020. The Company recently reached a significant milestone of 300 million barrels of cumulative oil production from the Tawke and Peshkabir fields.

Activity remains high as the Company continues to deliver its largest drilling campaign in its 48-year history with some 36 wells in 2019, of which 22 are development/infill wells and 14 exploration/appraisal wells. DNO projects full-year operational spend of USD 620 million (post-tax), of which USD 454 million was spent through the end of the third quarter, including USD 244 million in Kurdistan and USD 210 million (post-tax) in the North Sea.

Financial results were impacted by impairment charges of USD 138 million, including USD 89 million for technical goodwill on the Brasse discovery (Norway) and USD 33 million for decommissioning of the Schooner and Ketch fields (United Kingdom).

With USD 228 million in cash from operations during the third quarter, the Company resumed its share buyback program and acquired 23 million shares at a cost of USD 35 million, lifting its overall stake to 58 million treasury shares, representing 5.35 percent of the total outstanding shares at end quarter. DNO also bought back an additional USD 17 million of FAPE01 bonds during the quarter.

DNO maintained its previously approved dividend distribution program with another semi-annual payment of NOK 0.20 per share to be made on 4 November 2019.

“We continue to deliver across a range of operating and financial targets even as we paused this quarter for early spring cleaning of our balance sheet,” said DNO’s Executive Chairman Bijan Mossavar-Rahmani. “Given global headwinds, we are budgeting at the low end of the industry’s Brent price range of USD 60-70 per barrel,” he added.

CWI production during the third quarter included 84,400 bopd from Kurdistan and 14,900 boepd from North Sea assets acquired earlier this year.

In 2019, nine wells were spud in Kurdistan through the end of the third quarter, with an additional ten wells planned for the fourth quarter. In the North Sea, 13 wells were spud through the end of the quarter, with an additional four wells planned for the fourth quarter, including DNO’s first operated exploration well, Canela, in the North Sea since 2007.

DNO exited the third quarter with a cash balance of USD 624 million in addition to USD 110 million in treasury shares and marketable securities.

(Source: DNO)