DNO ASA has cut $300 million from its 2020 budget, a 30% reduction from previous guidance, in response to current market conditions.
Steps have been taken to suspend most discretionary drilling and capital projects across the company’s portfolio and staff reductions have been initiated.
The company said it will focus on key projects in the Kurdistan region of Iraq, noting it is still working to complete testing of the Baeshiqa-2 exploration well starting late this month. As reported, the well flowed light oil and sour gas to surface and testing of remaining reservoirs will resume following a well workover program, now completed, to assess commerciality.
DNO also plans still to complete its $100 million Peshkabir-to-Tawke gas capture, transport, and reinjection project in Kurdistan to reduce CO2 emissions at Peshkabir field and boost oil recovery at Tawke field. Gas reinjection will begin in early April.
Exploration, appraisal, and development drilling has been scaled back, as both DNO and contractor staff movements and rotations have been impacted by coronavirus travel restrictions.
By the end of March, the number of active drilling rigs deployed by DNO in Kurdistan will drop to two (including one workover rig) from six (two workover rigs) at the beginning of the year. Production at the Tawke and Peshkabir fields has already started to drop to below 115,000 b/d.
DNO’s ability to maintain its level of spending has also been strained by interruptions and delays to monthly payments for its oil exports from Kurdistan; the last payment received in January covered September 2019 exports.
DNO reported 2019 annual revenue of $971 million, up 17% from year earlier levels with company working interest production up 28% year-on-year to a record 104,800 boe/d. Yearly results were impacted by non-recurring items as well as lower oil prices and increased exploration expenses resulting in operating profit of $76 million.