DNO to step up drilling campaign in Oman and Iraq

DNO has announced it will increase the drilling campaign in the Kurdistan region of Iraq and Oman due to 2016 operating profits and improved payments for exports from the Tawke field.

The company also released its annual reserves report that indicated an increase in combined proven and probable reserves (2P) and contingent resources (2C) after it discovered new oil at the Peshkabir field in Kurdistan.

DNO reported an interim 2016 operating profit of $6m, reversing its operating loss of $174m in 2015.

After two years of cost cutting and asset rationalisation, the company is restarting investments to replenish its oil and gas reserves and restore production across its portfolio. This year, planned capital investments are estimated to be $100m, including four new production wells at Tawke.

DNO also plans to drill a third well at Peshkabir and an appraisal / production well at the Benenan field in the Erbil license.

It will also restart two wells in Oman at Block 8 offshore and intends to double its production from the West Bukha and Bukha fields.

DNO is considering three additional wells in the Tawke field to increase output above current levels of approximately 115,000bopd contingent on regular and predictable export payments from the Kurdistan Regional Government.

In 2016, DNO received ten payments totalling $210m net to the company for Tawke exports and outstanding receivables.

Three additional payments totalling $59m net to DNO have been received to date in the first quarter.

DNO executive chairman Bijan Mossavar-Rahmani said: “These payments create momentum as we move into 2017.”

He added: “The Peshkabir field positions us for production and reserves growth in our Kurdistan portfolio.”

As of 31 December 2016, DNO's Company Working Interest (CWI) 2P reserves and 2C resources was estimated to have increased to 529.6 million barrels of oil equivalent (mmboe) from 523.1mmboe at the end of 2015.

Tawke's 2P reserves and 2C resources were estimated to be 604 million barrels (mmbbls) at the end of last year, down from 643.2mmbbls at the end of 2015.

International petroleum consultants DeGolyer and MacNaughton conducted the annual independent assessment of the Tawke field, while DNO carried out an internal evaluation of the remaining assets.