DNO says Kurdish Iraq production on track despite spending cuts

DNO, a Norwegian exploration company, said that it expects production at the Tawke field in Kurdish Iraq to hit 200,000 barrels per day “in the first part of 2015” even as it cuts costs.

DNO reached cumulative production at Tawke of a solid 100 million barrels in February, but has struggled financially because of the Kurdistan Regional Government’s inability to keep up with payments to oil companies operating there.

DNO is 42.8 per cent owned by RAK Petroleum. Bijan Mossavar-Rahmani, DNO’s chairman, this month said the company would stay committed to the Kurdish region. “Our priority now is to work with the Kurdistan Regional Government to monetise all oil produced at Tawke according to contractual entitlements,” he said.

The company raised more than 802 million Norwegian kroner (Dh365.2m) through a sale of new shares in mid-March. The company’s chief financial officer, Haakon Sandborg, said lower oil prices meant DNO had to curb expansion plans, cutting US$20m out of costs for this year (which included an unspecified headcount reduction) and reducing capital expenditure to $100m for this year.

Capital expenditure in the previous two years was $297m and $288m, respectively.

The KRG said it expected to make inroads on the hundreds of millions of dollars of back payments it owes to companies, which include Dana Gas.

“DNO expects to realise our share of export revenues from Kurdistan consistent with our contractual terms,” Mr Sandborg said.

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