DNO seeks Iraq licence as profits hit
Oslo, February 16, 2008
Norwegian oil producer DNO reported weaker-than-expected operating profit for the fourth quarter and said output would remain roughly flat this year unless it gained a licence to export the oil it produces in Iraq.
Earnings before interest and tax were 65 million crowns ($11.9 million) for October-December, against 62 million a year earlier, below analysts' forecasts in a Reuters poll. Their estimates ranged from 118 million to 222 million crowns.
Net profit surged to 829 million crowns, versus a loss of 31 million crowns a year earlier, but that was thanks to a previously announced 871 million crowns gain from the spin-off of DNO's Norwegian shelf unit Noil Energy.
Analysts said the results were disappointing, especially from the Yemen production hub where DNO said reserves were revised down by 10.8m barrels of oil.
It also said its Yemen output would fall to about 9,000 barrels this year from 11,637 last year. 'The reserves in Yemen were a disappointment, and the results as well,' said an analyst.
Chief executive Helge Eide said DNO's exploration results in Yemen did not live up to expectations.
'But we have an extensive programme in Yemen and in Kurdistan with great potential,' Eide said.
DNO said it continued to deliver by truck the oil from its Tawke field in Kurdish north Iraq, while building up infrastructure to export the oil to Turkey via pipeline once it gains an export licence. DNO said it was optimistic about receiving a licence this year.
'From what the Kurdish Regional Authorities said a couple of weeks ago in London, a licence for export in northern Iraq is expected sometime this year,' Eide said. 'We believe this will happen.'
'In 2008, DNO is targeting a substantial resource potential through an extensive exploration programme, and a step change in production could be achieved once an export permit is in place in Kurdistan,' Eide said.