DNO ASA, the Norwegian oil and gas operator, has been assigned the 20 percent interest in the Tawke license held by the Kurdistan Regional Government as part of a landmark settlement of outstanding receivables owed to the company for past crude oil deliveries. Following the settlement, DNO holds a 75 percent operated stake in the license containing the Tawke and Peshkabir fields with combined proven and probable reserves in excess of 500 million barrels and production in excess of 100,000 barrels of oil per day.

In addition to the 20 percent interest, the company will receive three percent of gross license revenues each month from the government over a five-year period. The settlement is effective as of 1st August, 2017.

DNO has settled its claims for all outstanding Tawke license receivables from the government and the government has exercised its Tawke license audit rights to its satisfaction for the period up to the effective date and has no adjustment claims. The government has also discharged DNO from certain payment obligations including production bonuses, license fees and a US$150 million water purification project that is no longer required by the government.

The removal of these liabilities and the transfer to DNO of the 20 percent interest and the right to the three percent revenue stream will bolster the company's balance sheet and future cash flow.

"We are very pleased with the Government's initiative to settle receivables and normalize export payments to the operators," said Bijan Mossavar-Rahmani, DNO's Executive Chairman. "This sends a strong positive signal to investors and helps restore confidence in Kurdistan's oil sector," he added.

DNO's June-July 2017 outstanding invoices for Kurdistan exports will continue to be paid under the payment arrangement in place since January 2016.

Meanwhile, DNO reported strong half-year 2017 performance, with revenues up 43 percent from the same period last year following regular export payments in the Kurdistan region of Iraq. Free cash flow jumped four-fold to US$157 million on operated production of 114,000 barrels of oil equivalent per day (boepd) during the first half of the year.

DNO's cash balance rose US$120 million during the first six months to US$381 million, reducing net debt to US$19 million. Planned 2017 capital expenditures have been increased to US$130 million, up from the guidance set earlier this year of US$100 million.

The Company mobilised a third rig as part of an expanded drilling program at its flagship Tawke field comprising 10 production wells in 2017, of which six are deep Cretaceous and four shallow Jeribe wells.

Also on the Tawke license, the Peshkabir-2 well has been producing from the Cretaceous reservoir at a steady rate of 4,700 barrels of oil per day (bopd) since June. The well can produce an additional 2,500 bopd from the Jurassic reservoir.

The Peshkabir-3 well, spud in July, is drilling at 2,400 meters towards target depth of 4,000 meters to appraise the northern extension of the Cretaceous reservoir. An early production facility has been acquired for installation at the field, with both Peshkabir wells planned on-stream by year-end and two additional wells planned in 2018.

DNO ASA is a Norway-based oil and gas operator focused on the Middle East and North Africa. Founded in 1971 and listed on the Oslo Stock Exchange, the company holds stakes in onshore and offshore licenses at various stages of exploration, development and production in the Kurdistan region of Iraq, Yemen, Oman, the United Arab Emirates, Tunisia and Somaliland. Its largest shareholder is UAE-based RAK Petroleum.

Source: WAM