DNO to reduce Kurdistan production, continue North Sea drilling

DNO ASA has scaled back spending in Kurdistan but has increased discoveries in the Troll-Gjøa area in the North Sea, according to the company’s first quarter 2023 report.

The number of active rigs at the operated flagship Tawke license will drop to zero in second-half 2023 following completion of previously planned activities from the four working at the start of the year. The shutdown follows an arbitration ruling in favor of Iraq against Turkey for exporting Kurdish oil without Baghdad’s approval (OGJ Online, Mar. 29, 2023).

With these cuts, 2023 operational spend in Kurdistan has become heavily frontloaded, with 40% of the current full-year budget already spent in the first quarter. Until export restarts and regularity of payment for past and ongoing oil sales is established, DNO said it cannot provide any projection of full-year Kurdistan production.

In the North Sea in first-quarter 2023, DNO participated in discoveries at Røver Sør (DNO 20%) and Heisenberg (DNO 49%). These are the fourth and fifth consecutive discoveries for the company in the Troll-Gjøa area and are candidates for tieback to nearby platforms (OGJ Online, Mar. 14, 2023). The five discoveries are estimated to contain recoverable resources totaling 50 MMboe net to DNO.

Seven wells remain to be drilled or completed as part of the 2023 North Sea exploration program, all but two in the Troll-Gjøa area. The first, Carmen (DNO 30%), is currently drilling, and will be followed by Eggen (DNO 20%), Litago (DNO 20%), Norma (DNO 40%), Bergknapp (DNO 30%, appraisal well), Ofelia (DNO 10%, appraisal well), and Cuvette (DNO 20%).

Net production across DNO’s portfolio in the quarter averaged 89,400 boe/d, of which Kurdistan contributed 70,900 boe/d, North Sea 14,800 boe/d, and West Africa 3,700 boe/d. Oil not produced during the Kurdistan shutdown, as well as oil placed in storage, represent deferred volumes that will eventually be recovered and monetized, the company said.

In 2023, North Sea net production is projected to average 12,000-13,000 boe/d, while West Africa is projected to deliver an additional 3,500 boe/d net to DNO. Total 2023 operational spend across the company is currently projected at $590 million, of which the largest portion represents North Sea activities.