Genel Confirms Increased year-on-year Production

Genel Energy has issued the following statement relating to the Company's Annual General Meeting ('AGM'), which is being held today:

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

"The addition of production at Sarta and the robust performance of Tawke year-to-date has increased year-on-year production in line with guidance. With a strong balance sheet, our high-potential appraisal drilling campaign is now underway following the spud of the QD-2 well at Qara Dagh. With the increase in oil price and beginning of catch up payments from the KRG, despite our investment in growth and payment of a material dividend, we expect to end 2021 with a material cash position."

"As detailed in our full-year results, 2020 illustrated the resilience of our business, and laid the foundations for a year of growth in 2021, with material drilling catalysts.

"Despite the ongoing challenges of COVID-19 in the operating environment in 2021, we continue to carry out our work programmes across all producing and appraisal assets as we aim to deliver on the significant near and long-term potential in the portfolio.

"Continuing robust production at the Tawke PSC, coupled with the addition of production from our fourth producing field at Sarta, means that working interest production averaged 33,100 bopd in the first four months of 2021, an increase of 4% compared to the 2020 average, in line with guidance.

"DNO ASA, as operator of the Tawke PSC (Genel 25% working interest), today issued an update on licence activity, where spend early in the year on drilling of new wells and workovers of existing ones helped sustain gross operated production at 112,000 bopd in the first quarter, up from 110,000 bopd in the previous quarter. The Peshkabir field contributed 61,400 bopd, and Tawke 50,600 bopd.

"12 wells are forecast on the licence in 2021, of which nine are at Tawke and three at Peshkabir. DNO has increased gross operated Tawke licence full-year 2021 production guidance to 110,000 bopd.

"Genel's high-potential drilling campaign has now begun, with the QD-2 well having spud on 19 April 2021. This well is set to appraise the crest of a 50 km long structure at Qara Dagh, around 10 km from the location of the QD-1 well, which flowed light oil in 2011, despite being drilled down dip and in a sub-optimal manner in an era predating Genel and Chevron's much evolved understanding of the subsurface situation and required drilling strategy. Results from the QD-2 well are anticipated in late Q3 2021. As we step up our work at the field, we are further ramping up our social investment programme, working with local companies to deliver projects that respond to the requirements of local communities.

"Sarta is producing at a mechanically constrained gross rate of c.8,500 bopd, pending ongoing surface facilities de-bottlenecking. These actions are expected to result in production once again reaching c.10,000 bopd in the near future.

"Mobilisation of two drilling rigs at the licence is now underway, ahead of the spudding of the Sarta-5 and Sarta-1D wells next month. The Sarta-5 well is set to test multiple reservoir intervals up-dip of the Sarta-2 and Sarta-3 producing wells, and results are expected around the end of Q3. A second rig will drill the Sarta-1D well, a sidetrack well from the Sarta-1 well pad, with results expected at a similar time to Sarta-5. Following the construction of a flow line to the early production facility, production is expected from this well around the end of 2021. With the Sarta-6 well set to be drilled immediately after Sarta-5, analysis of pilot production data and the results of the appraisal well programme will provide an enhanced understanding of the greater resource potential of Sarta and inform the optimal development plan to exploit it.

"The continued oil price strength has helped to further increase the value of our high-margin production. Our cash position at the end of April was $266 million, a net debt position of $3 million, with $36 million owed by the KRG for production in March 2021. Given our expectation that payments will remain timely, we forecast ending 2021 with a material net cash position.

"This financial strength supports the paying of a material dividend, as we continue to offer investors a compelling mix of growth and returns. Pending approval of our final dividend of 10¢ per share at today's AGM, the ex-dividend date is 13 May, with payment on 14 June 2021."

(Source: Genel Energy)

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DNO Returns to Profitability, Ups Tawke Production Guidance

DNO ASA, the Norwegian oil and gas operator, today reported operating profit of USD 66 million in the first quarter of 2021, following four quarters of losses triggered by market perturbations from the global Covid pandemic. The turnaround was driven by solid production, cost optimization, higher oil prices and regularization of payments from Kurdistan.

The Company stepped up spend early in the year with drilling of new wells and workovers of existing ones in its flagship Tawke license to sustain gross operated production from the Tawke and Peshkabir fields at 112,000 barrels of oil per day (bopd) in the first quarter, up from 110,000 bopd in the previous quarter. Net production attributable to the Company's interest across the portfolio, including from DNO's North Sea oil and gas assets, stood just shy of 100,000 barrels of oil equivalent per day (boepd).

In another positive development during the quarter, Kurdistan initiated principal payments towards Tawke license 2019 and 2020 withheld entitlement and override amounts, reducing the outstanding balance due DNO from USD 259 million to USD 239 million. If oil prices and license production remain around current levels through 2021, some two-thirds of the remaining arrears will be recovered by the end of the year.

"DNO, like our peers, is positioned for strong cash flow in 2021 with the firming up of oil demand and prices," said DNO's Executive Chairman Bijan Mossavar-Rahmani. "Barring another pandemic derailing of global economic activity, we will repair our balance sheet, regroup in person and then fly like a bat out of hell in pursuit of opportunity," he added.

DNO exited the first quarter with a cash balance of USD 477 million and as a first step towards shoring up its balance sheet, the Company yesterday announced it would retire USD 100 million in bond debt on 1 June 2021 by exercising a call option on the USD 400 million DNO02 bond.

The Company has budgeted full year operational spend of USD 700 million, including 12 Tawke license wells of which nine in Tawke and three in Peshkabir. Gross operated Tawke license full-year 2021 production guidance has accordingly been increased to 110,000 bopd. DNO operates and has a 75 percent stake in the Tawke license, with partner Genel Energy plc holding the balance.

DNO will participate in an active drilling program in the North Sea with five exploration and eight development wells during the balance of 2021.

(Source: DNO)

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DNO announces Ramp-Up of Oil Production in Iraq

DNO ASA, the Norwegian oil and gas operator, today reported receipt of USD 54.0 million net to the Company from the Kurdistan Regional Government (KRG), of which USD 35.2 million represents DNO's entitlement share of February 2021 crude oil deliveries to the export market from the Tawke license in Kurdistan.

Of the balance, USD 4.6 million is an override payment equivalent to three percent of gross February 2021 Tawke license revenues under the August 2017 receivables settlement agreement and USD 14.2 million is a payment towards the Company's arrears relating to withheld payment of Tawke license 2019 and 2020 entitlement and override invoices.

Following receipt of the latest arrears payment, the outstanding balance has dropped from USD 259.0 million at the end of 2020 to USD 238.6 million.

DNO operates and has a 75 percent stake in the Tawke license, which contains the Tawke and Peshkabir fields, with partner Genel Energy plc holding the balance.

With resumption of payments, the partners have stepped up drilling of new wells at Peshkabir and workovers of existing wells at Tawke in 2021, raising gross operated license production from an average of 110,300 barrels of oil per day (bopd) in 2020 to 110,900 bopd in January, 112,000 bopd in February, 113,100 bopd in March and 115,500 bopd month-to-date in April.

(Source: DNO)

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Genel Energy Updates on Oil Reserves

Genel Energy has issued an update on oil reserves and resources across its portfolio.

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

"The quality of our reserves is the foundation of our resilient business model, providing us with low-cost production that can generate cash for many years to come.

"Drilling at Sarta this year has the potential to add to our reserves, with Qara Dagh adding the possibility of opening up another field in the Kurdistan Region of Iraq, as we look to further build our cash generative portfolio for the benefit of all stakeholders."

Net oil reserves (MMbbls) 1P 2P 3P
31 December 2019 68.8 123.8 194.9
Production (11.7) (11.7) (11.7)
Technical revisions 12.2 5.0 (6.0)
31 December 2020 69.4 117.2 177.2

International petroleum consultants DeGolyer and MacNaughton assess that, at the Tawke field on the Tawke licence (Genel 25% working interest), gross year-end 2020 1P reserves stood at 173 MMbbls, compared to 176 MMbbls at year-end 2019, after adjusting for production of 21 MMbbls and an upward technical revision of 18 MMbbls. Tawke field 2P reserves stood at 245 MMbbls (261 MMbbls at end-2019) and 3P reserves at 359 MMbbls (376 MMbbls at end-2019).

The Enhanced Oil Recovery project at the Tawke field has started to deliver a positive impact on production. Pending further work on the project, the 23 MMbbls of 2P and 45 MMbbls of 3P gross reserves that DeGolyer and MacNaughton previously included in their figures continues to be maintained by Genel in 2C and 3C resources.

At Peshkabir, also on the Tawke licence (Genel 25% working interest), year-end 2020 gross 1P reserves were assessed at 61 MMbbls (51 MMbbls at end-2019), 2P reserves at 116 MMbbls (125 MMbbls at end-2019) and 3P reserves at 201 MMbbls (220 MMbbls at end-2019). The upward revision of 1P and 2P reserves by 29 MMbbls more than offsets production of 19 MMbbls, and is the result of continued outstanding field performance in 2020.

At Taq Taq (44% working interest, joint operator), 1P gross reserves stood at 18 MMbbls at year-end 2020 (20 MMbbls at end-2019), following a minor technical upward revision of 1 MMbbls and production of 4 MMbbls. Gross 2P reserves stood at 33 MMbbls (44 MMbbls at end-2019), with a downward revision of 8 MMbbls following a reduction to the number of wells planned for the future, and their associated expected productivity. McDaniel & Associates carried out the independent assessment of the Taq Taq licence.

Genel's gross 2P reserve estimate relating to Phase 1A of the Sarta development remains unchanged at year-end 2020, standing at 34 MMbbls.

CONVERTING RESOURCES TO RESERVES

Net oil resources (MMbbls) 1C 2C 3C
31 December 2019 66.5 152.0 345.8
Technical revisions (8.6) (8.6) (8.0)
31 December 2020 57.9 143.4 337.8

There has been no change to the ERCE view on Sarta (30% working interest), with an estimated mid-case total recoverable oil resource of 593 MMbbls, of which 258 MMbbls are classified as 2C resource. Production performance in 2021, and the results of the upcoming three well campaign in 2021, will inform the quantity of conversion of these resources into reserves.

At Qara Dagh (40% working interest, operator) the QD-2 well will test the crestal portion of the prospect, which has a mean prospective resource estimated by Genel at c.400 MMbbls. Genel continues to estimate that the downdip segment tested by the QD-1 well defines a 2C resource of 47 MMbbls.

(Source: Genel Energy)

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DNO Buys Exxon’s Stake in Iraqi Oilfield

DNO ASA, the Norwegian oil and gas operator, has announced the acquisition of ExxonMobil's 32 percent interest in the Baeshiqa license in the Kurdistan region of Iraq, doubling DNO's operated stake to 64 percent (80 percent paying interest), pending government approval.

The Company plans to continue an exploration and appraisal program on the license while fast tracking early production from existing wells in 2021.

DNO has already demonstrated proof of concept of producing through temporary test facilities, having delivered 15,000 barrels of 40o API oil and 22o API oil for export from the Baeshiqa-2 and Zartik-1 wells, respectively.

In November 2019 DNO issued a notice of discovery on the Baeshiqa license after flowing hydrocarbons from several Jurassic and Triassic zones to surface in the 3,204 meters (2,549 meters TVDSS) Baeshiqa-2 exploration well. Following acid stimulation, the zone flowed variable rates of light oil and sour gas.

Two zones flowed naturally at rates averaging over 3,000 barrels of oil per day (bopd) of light gravity oil each and another averaged over 1,000 bopd also of light gravity oil. Subsequent analyses on surface samples collected during testing confirm that the Triassic reservoirs contain saturated oil with a gas cap.

An exploration well was completed in 2020 on a second structure (Zartik) some 15 kilometers southeast of the Baeshiqa-2 discovery well. The 3,021 meters (2,322 meters TVDSS) well tested hydrocarbons to surface from several Jurassic zones, with the uppermost zone flowing naturally at rates averaging over 2,000 bopd of medium gravity oil.

The Company currently estimates gross license contingent recoverable resources from three of the tested zones in the two wells ranging from 12 million barrels of oil (mmbbls) (1C) to 156 mmbbls (3C), with a 2C volume of 43 mmbbls.

"By increasing our stake in the Baeshiqa license now, we demonstrate our belief in its ultimate potential," said Bijan Mossavar-Rahmani (pictured), DNO's Executive Chairman. "Following the stabilization of oil prices and export payments in Kurdistan, DNO is stepping up spending on new opportunities," he added.

DNO acquired its first 32 percent interest from ExxonMobil and assumed operatorship of the Baeshiqa license in 2018.

The 324 square kilometer license is situated 60 kilometers west of Erbil and 20 kilometers east of Mosul. The license contains two large structures, Baeshiqa and Zartik, which have multiple independent stacked target reservoir systems, including in the Cretaceous, Jurassic and Triassic. The remaining partners in the license include TEC [Turkish Energy Company] with a 20 percent paying (16 percent net) interest and the Kurdistan Regional Government with a 20 percent carried interest.

In addition to the Baeshiqa license, DNO also operates the Tawke license containing the Tawke and Peshkabir fields in Kurdistan. Gross operated production from the Tawke license averaged 110,300 bopd in 2020.

(Source: DNO)

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Genel Energy issues Update on Tawke

Genel Energy notes that DNO ASA, as operator of the Tawke PSC (Genel 25% working interest), has issued an update on licence activity.

Gross operated production from the Tawke licence averaged 110,300 bopd in 2020, about evenly split between the Tawke and Peshkabir fields, the sixth consecutive year in which gross Tawke licence production has averaged over 100,000 bopd.

With higher oil prices and more visibility on Kurdistan export payments, up to eight new development wells will be drilled at the Tawke licence and multiple workovers on existing producing wells will be undertaken in the drive to maintain production above 100,000 bopd.

Between the middle of 2020 and the end of the year, a total of 2.4 bcf of Peshkabir field gas, which otherwise would have been flared, was piped and reinjected into the Tawke field for pressure maintenance, leading to an estimated 200,000 barrels of incremental oil recovery and 400,000 barrels of reduced field water production. Another 0.3 bcf of gas were reinjected into the Peshkabir field itself.

(Source: Genel Energy)

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DNO boosts Kurdistan Oil Output in Q3

DNO ASA, the Norwegian oil and gas operator, today reported boosting Kurdistan output to 113,700 barrels of oil per day (bopd) in the third quarter, reversing declines triggered by oil market convulsions in the wake of Covid-19.

Production from the DNO-operated Tawke and Peshkabir fields was up 12 percent from the prior quarter following a campaign of quick turnaround, low cost well interventions and the startup of the Kurdistan region of Iraq's first enhanced oil recovery project.

Both fields have outperformed expectations and DNO projects replacement of a significant share of its reserves produced this year in Kurdistan, even as the Company scaled back drilling of new wells to meet a one-third budget reduction in response to lower oil prices and a four-month payment hiatus in Kurdistan.

The Peshkabir-to-Tawke gas capture and reinjection project, in operation since mid-year, is continuing to cut gas flaring and greenhouse emissions by half at Peshkabir to 7 kilograms CO2 equivalent for each barrel of oil equivalent produced, while unlocking additional oil at Tawke. To date, two billion cubic feet of otherwise flared gas have been reinjected with positive reservoir response, adding up to 5,000 bopd.

"Starting in June, our Kurdistan teams took up the challenge of doing more with less,  launching creative solutions they called Operation Throttle-Up and Operation Afterburner, which delivered the stellar operational results we report today," said Bijan Mossavar-Rahmani, DNO's Executive Chairman. "Once again, at DNO the oil we produce is conventional; how we do it is not."

Across the portfolio, third quarter 2020 Company Working Interest (CWI) production increased nine percent from the second quarter to 97,900 barrels of oil equivalent per day (boepd), of which Kurdistan contributed 80,200 bopd and the North Sea 17,700 boepd.

DNO expects to exit the year with Kurdistan and North Sea production at third quarter levels.

Revenues more than doubled to USD 163 million in the third quarter on the back of improved oil prices and higher cargo liftings of previously produced oil in the North Sea. EBITDA climbed to USD 76 million in the third quarter up from USD 13 million in the previous quarter on higher revenues.

However, North Sea non-cash impairments of USD 202 million pre-tax (USD 118 million post-tax) related principally to the South East Tor and Iris/Hades assets led to an operating loss of USD 208 million.

In July 2020, the Company completed the drilling of Zartik-1, the third exploration well on the Baeshiqa license on a separate structure around 15 kilometers southeast of the Baeshiqa-2 discovery well. Testing of the Zartik-1 Upper Jurassic reservoirs continued through the third quarter. Evaluation of the results of the previously reported discoveries in the Baeshiqa-2 well is ongoing to determine commerciality.

Temporary Norwegian petroleum tax incentives are driving investment plans, with the Company maturing development options for the Brasse field (2021 PDO) and evaluating the Iris/Hades, Fogelberg and Trym South discoveries (2022 PDOs). Appraisal of the Bergknapp discovery (DNO 30 percent), among Norway's largest discoveries this year, is scheduled for 2021.

Two exploration wells are scheduled in the fourth quarter with Polmak already drilling in the Barents Sea (DNO 20 percent) and Røver Nord to spud shortly in the Northern North Sea (DNO 20 percent). These wells will be followed by an active exploration program in 2021 including wildcat wells at Gomez in the Southern North Sea (DNO 85 percent) and Edinburgh cross-border (UK-Norway) in the North Sea (DNO 45 percent).

Following the latest UK licensing round, DNO was awarded four licenses (two operated) all with previous discoveries.

(Source: DNO)

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DNO Starts Gas Capture in Kurdistan

DNO ASA, the Norwegian oil and gas operator, today announced that the USD 110 million Peshkabir Gas Capture and Injection Project in its Tawke license in the Kurdistan region of Iraq is onstream and has reached the one billion cubic feet of gas injection milestone.

The project is expected to reduce annual emissions from the Company's operated production by over 300,000 tonnes of CO2 equivalent, offsetting the emissions from some 150,000 automobiles.

Engineering and construction were launched in mid-2018 and commissioning completed in mid-2020 in what is the first gas capture and storage project in Kurdistan. Some 20 million cubic feet a day of previously flared gas at the Peshkabir field is gathered, treated and transported 80 kilometers by pipeline to the Tawke field where it is injected for storage and reservoir pressure recharging.

Effective June 2020, the project halves the average carbon intensity of the Company's operated production from 14 kilograms CO2 equivalent for each barrel of oil equivalent produced (kg CO2e/boe) to an average of 7 kg CO2e/boe. This compares to the target set by a group of 12 of the world's largest oil companies comprising the Oil and Gas Climate Initiative (OGCI) to reduce the average carbon intensity of their aggregated upstream oil and gas operations to between 20-21 kg CO2e/boe by 2025 from a collective baseline of 23 kg CO2e/boe in 2017.

"Gas injection and the associated carbon capture and storage is proven, practical and potentially profitable," said Bijan Mossavar-Rahmani, DNO's Executive Chairman. "Our project was completed on schedule and on budget notwithstanding the challenges of working in what is still a frontier oil and gas operating environment and the obstacles posed in the late stages by the Covid-19 pandemic," he added.

Gas flaring at the Peshkabir field has been reduced by over 75 percent, with work underway to reduce it further. Any Peshkabir field injected gas produced at the Tawke field will be recovered and recycled into the latter or used as fuel to displace diesel.

Reservoir models suggest gas injection will increase gross Tawke field recoverable volume by 15 to 80 million barrels of oil, of which 23 million barrels are included in the gross proven and probable (2P) Tawke field reserves in the DNO 2019 Annual Statement of Reserves and Resources.

DNO's greenhouse gas emissions increased following commencement of production from the Peshkabir field in 2017 as the oil contains a relatively high associated gas content. Flaring from the Peshkabir field was the largest single contributor to DNO's total 2019 greenhouse gas emissions of 639,200 tonnes of CO2e.

Mr. Mossavar-Rahmani announced the launch of a new initiative to more actively measure, monitor and mitigate methane leakages at DNO's operated sites, noting that while CO2 emissions from oil and gas operations receive the greatest attention, methane emissions are a significant but underreported source of greenhouse gas with an impact 25 times greater than CO2 on a 100-year horizon.

DNO operates the Tawke license containing the Tawke and Peshkabir fields with a 75 percent interest; partner Genel Energy plc holds the remaining 25 percent.

The Company will publish its Corporate Social Responsibility Report, which covers greenhouse gas emissions developments and strategies, next week.

(Source: DNO)

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DNO “Steps Up Activity”

DNO ASA, the Norwegian oil and gas operator, today reported stepped up investments across its portfolio on the back of higher production and significantly improved liquidity outlook as the Company recovers from the oil market turmoil that upended the second quarter of 2020.

Operated production in July at the Company's flagship Tawke license in the Kurdistan region of Iraq is up 15,000 barrels of oil per day (bopd) month-on-month to 115,000 bopd following a well intervention campaign fast tracked in June with the stabilization of oil prices and improved export payment terms.

In the North Sea segment, DNO projects receipt of USD 215 million in tax refunds in the second half of the year, including USD 70 million from the recently announced temporary changes to petroleum taxation in Norway.

"The worst of the coronavirus pandemic hit to our business is behind us and DNO is back identifying and capturing opportunities," said Bijan Mossavar-Rahmani, DNO's Executive Chairman. "Still, we are prepared to act quickly, as we did in March, if a strong second wave comes," he added.

Second quarter Company Working Interest (CWI) production stood at 89,700 barrels of oil equivalent per day (boepd) of which Kurdistan contributed 71,900 bopd and the North Sea 17,800 boepd.

Gross operated Tawke license production averaged 102,000 bopd, including 58,100 bopd from the Tawke field and 43,900 bopd from the Peshkabir field, together down 11 percent from the first quarter as development activity dropped off to preserve cash at a time of historically low and uncertain oil prices.

Second quarter revenues slid to USD 72 million and operating losses climbed to USD 81 million, both driven by weak commodity prices across the portfolio and lower cargo liftings of produced oil in the North Sea.

At the Baeshiqa license in Kurdistan, DNO continued drilling the third exploration well on a second structure (Zartik) some 15 kilometers southeast of the Baeshiqa-2 discovery well. The rig has been released and testing will commence in August in Lower Jurassic and Upper Triassic zones intersected by the well and expected to last three months. Evaluation of the Baeshiqa-2 results is ongoing to determine commerciality.

During the first half of 2020 DNO received a total of USD 224 million in payments from the Kurdistan Regional Government. In addition, the Company received a USD 23 million June entitlement payment after the end of the reporting period. Discussions are ongoing to reach an agreement on acceptable terms and timing of payment of arrears totaling USD 240 million due to DNO for the November 2019-February 2020 entitlements and November 2019-June 2020 override payments.

Notwithstanding the interruption of these payments and DNO's repayment of the remaining USD 138.5 million of the DNO01 bond at maturity on 18 June 2020, the Company exited the first half of 2020 with a strong cash balance of USD 427 million. Net debt at the end of the second quarter stood at USD 537 million, down from USD 559 million at the end of the first quarter.

Last month, DNO commissioned the Peshkabir-to-Tawke gas reinjection project, the first enhanced oil recovery project in Kurdistan, to unlock additional oil volumes at Tawke while significantly reducing gas flaring and CO2 discharges at Peshkabir.

Prompted by the tax changes in Norway, the Company is working with partners to accelerate infill drilling at the Ula, Tambar and Brage producing fields, revisit development options for the Brasse field and actively evaluate the Iris/Hades, Fogelberg and Trym South discoveries.

DNO will remain an active explorer in the North Sea, targeting 4-6 wildcat wells a year.

(Source: DNO)

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)