DNO has previewed its Q4 and end of year 2011 results with a “strong” set of headline numbers.
The results, which are set to surpass analysts’ expectations, will be the last set of figures before DNO brings the Middle East and North Africa assets of RAK Petroleum into its accounts, following the acquisition of RAK’s assets in early January this year.
The rosiness of the figures is partly attributable to the company’s decision to book a cash advance from the Iraqi Ministry of Oil as income, which boosted earnings for Q4 to around NOK 900 million ($156 million) and to NOK 2 billion for 2011 ($347 million), up 65% from 2010.
In September 2011 DNO received $60 million from Baghdad, via the Kurdistan Regional Government, in respect of oil exports from the Tawke field operated by the Company in northern Iraq, following an initial delayed payment of $103.7 million made in June.
Baghdad did not officially pay out the sums as payment for oil revenues as the official oil ministry position is that DNO’s production sharing contracts with the KRG are illegal. Instead, the ministry attributes payments to reimbursements of operating expenses.
“The payment was not recorded as revenue in Q3 2011. Following additional assessment and review of new information, this payment will be recorded as revenue in Q4 2011,” the company said in a statement on its website.
DNO also booked NOK 346 million ($60 million) of production costs for the Tawke field through 2011 in the fourth quarter.
The rest of DNO’s Iraqi revenue comes from exports from its Feyshkabour export center, which are currently at 50,000 barrels per day, and from selling its crude in the Kurdish regional market, where it fetches $50-60 a barrel.
In a production report dated 2 February the company reported working interest production of 30,345 bpd from the Kurdish region of Iraq.
DNO’s EBITDA for Q4 2011 was around NOK 660 million ($114 million) and is expected to be around NOK 1.4 billion ($243 million) for the full year 2011, up from NOK 474 million ($82 million) in 2010.
Net profit for Q4 2011 was around NOK 200 million ($34.7 million). For the full year 2011 net profit is expected to be around NOK 650 million ($112 million) compared with a loss of NOK 283 million ($49 million) in 2010.
DNO´s cash position at yearend 2011 was NOK 1.75 billion ($303 million).
The news pushed DNO’s shares up 5.29% in morning trading to NOK 9,34 ($1.62).
The full results will be published on 15 February.
