DNO faces delays in Kurdistan as suppliers flee Iraq violence
OSLO, Norway (Bloomberg) -- DNO ASA said projects in the Kurdistan region will probably be delayed after service companies evacuated staff because of violence near the region.
The timing of some projects in DNO’s three Kurdistan blocks will be “likely impacted by developments beyond our control,” the Oslo-based company said Aug. 21 in presentation material published with second-quarter results. “A number of services companies, equipment suppliers, drillers and other contractors have evacuated personnel and suspended Kurdistan operations.”
Clashes over the past weeks between Islamic State fighters and Kurdish forces, supported by U.S. air strikes, have threatened the destabilization of a region that’s enjoyed relative tranquility compared with the rest of Iraq. Oil companies including Chevron Corp. and Afren Plc have evacuated expatriate staff and halted drilling operations.
Operations at DNO’s Tawke field have been uninterrupted and plans for its expansion are on track as it boosted security, retained key operational staff and reinforced its management team, the company said.
DNO’s net income fell to $44.4 million in the quarter from $48 million a year earlier, missing analyst estimates of $46 million.
DNO, the first western explorer to drill for oil in Iraq after the 2003 U.S.-led invasion, is “better positioned to adapt to recent developments on the ground,” the company said.
“We’ve had feet on the ground in Kurdistan for ten years, including during the recent crisis as well as in past ones, and remain fully and firmly committed to our operations,” Executive Chairman Bijan Mossavar-Rahmani said in a statement.
DNO rose 0.4% to 19.2 kroner as of 9:10 a.m. in Oslo.
During the second quarter, before Islamic State fighters took over Kurdish-controlled towns, DNO set daily records for production at Tawke of 133,192 bbl and for exports of 126,048 bbl, it said. The company, which has been caught in a conflict between the Kurdistan Regional Government and central Iraqi authorities over the proceeds of exports, has yet to be paid for piped deliveries to the Turkish port of Ceyhan.
“Our next challenge is to properly monetize all oil produced at Tawke by tapping international markets,” said Mossavar-Rahmani.