OSLO: Independent oil producer DNO has begun to see prospects for recovery from the impact of the coronavirus crisis after reporting a sharp fall in April-June revenue and core earnings.
DNO, with operations in Iraq’s semi-autonomous Kurdistan region as well as the North Sea, reported earnings before interest, tax, depreciation and amortization (EBITDA) of $12.9 million in the quarter, down from $176.6 million a year ago.
The decline was due to a fall in global oil prices amid the COVID-19 outbreak as well as lower output volumes as the company in March cut its spending on drilling to preserve cash, which decreased by 21 percent over the quarter to $427 million.
But in June the company began ramping up spending following a rebound in oil prices, leading to a rise in output at the start of the third quarter.
“The worst of the coronavirus pandemic hit to our business is behind us and DNO is back identifying and capturing opportunities,” DNO’s Executive Chairman Bijan Mossavar-Rahmani said in a statement.
DNO’s output, 80 percent of which came from Kurdistan, fell to 89,700 barrels of oil equivalent per day (boepd) in the second quarter from 106,800 boepd a year ago, as measured on so-called company working interest (CWI) basis.
Sparebank 1 Markets, which as a “buy” recommendation on DNO’s shares, said the company had raised its overall operational spending plan to $550 million for 2020 from $520 million seen in May, which could in turn lead to higher output.
DNO said it was considering approving several new projects off Norway by the end of 2022, including the Iris/Hades, Fogelberg and Trym South discoveries, after the country’s parliament approved tax incentives to help the industry.
The Norwegian tax change could generate $140 million in refunds for the company in 2020.