DNO did not give any details on the size or timing of the buyback, which it said was prompted by global financial markets turmoil and the fact it has a 1.2 billion crown cash pile. 

“Given the ongoing sell-off and sharp declines in global securities, we have decided to invest available cash to capitalize on the undervaluation of the company’s share price,” said chairman Bijan Mossavar-Rahmani, who is also Chief Executive of DNO’s biggest shareholder, RAK Petroleum.

DNO and UAE-based Rak last month said the Norwegian company would acquire oil and gas fields from Rak in return for DNO shares in a deal valued at higher than recent market levels.

The company also announced preliminary second-quarter results as it unveiled the buyback, saying core earnings more than tripled after it booked a $104 million payment for oil produced at its Kurdish fields and send outside the region. 

Previously the Baghdad government refused to pay companies for oil exported from Kurdistan, as it said the contracts, signed with the regional government, were invalid.

DNO was originally due to publish second-quarter results on Aug. 17 and will still plans to publish final figures then.

The company said preliminary earnings before interest, taxes, depreciation and amortization (EBITDA) came in at 565 million Norwegian crowns ($102 million), up from 171 million a year ago.

Arctic Securities analyst Trond Omdal said core earnings were “mainly in line” with his expectations and that the share price had not recently been reflecting the fact the company had started to receive payment for its Kurdish oil.

RBC Capital Markets analyst Al Stanton, however, said it was not clear of DNO would continue to be paid for its Kurdish output.

“Investing in Kurdistan is still not a mainstream play. We need to see greater clarity on the oil law and payment for exports,” he said.

In July, DNO and Rak announced a plan for DNO to buy Rak’s Middle Eastern oil and gas fields - valued at $250 million to $300 million — in return for DNO shares.

Rak agreed that the DNO shares it received would be valued at no less than 8.25 crowns and possibly as much as 10 crowns. On Tuesday the shares closed at 4.34 crowns.

The deal envisages Rak ending up with around 41 percent of DNO shares, against a 30 percent stake currently.

Both sides have sought independent valuations to agree the actual deal price but analysts said DNO’s recent share weakness had not argued for strike price in the upper end of the share price band announced in July.