DNO doubles Tawke capacity, reports lower 1Q revenue

DNO ASA reported it has doubled to 200,000 bo/d the production capacity from Tawke field in the Kurdistan region of Iraq (OGJ Online, Mar. 4, 2015).

The company says the wellhead, processing, and pipeline capacity milestone was reached in fewer than 2 years with 10 new horizontal wells and the construction of two early production facilities with combined capacity of 80,000 b/d and the installation of a 44-km, 24-in. pipeline.

Earlier in the week, the company hit a new Tawke production record of 156,379 bo/d and will ramp up output in the coming weeks by continuing to commission facilities and open wells. Discussions are under way with the Ministry of Natural Resources of the Kurdistan Regional Government to set future production levels, including a split between export deliveries and local sales.

“Higher Tawke production, including higher deliveries to Ceyhan, should help unlock payments to DNO,” said Bijan Mossavar-Rahmani, DNO executive chairman. “The timing and extent of export payments will drive new investment at Tawke which will be required to sustain the high production rates.”

DNO’s overall first-quarter output from Tawke averaged 104,925 bo/d, including 90,172 bo/d delivered for export and 8,679 bo/d sold into the local market, with the balance used in the Tawke refinery. Recent contracts have raised local sales from Tawke to 20,000 bo/d.

Weak local sales in Kurdistan in the first quarter and low oil prices led to reduced revenues for the company of $26 million. Write-downs of $27 million in Yemen following suspension of production from DNO-operated Blocks 32 and 43 due to a rapid deterioration in the country’s security conditions contributed to an operating loss $69 million in the quarter (OGJ Online, Mar. 31, 2015). The company ended the first quarter with $204 million in cash and $28 million in marketable securities.

DNO’s gross production in the first quarter from Kurdistan, Yemen, and Oman stood at 121,026 boe/d, of which company working interest production stood at 72,873 boe/d.

Capital expenditures in 2015 have been reduced to a projected $100 million, of which $35 million was spent in the first quarter.

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