DNO International ASA (DNO), an oil producer focused on northern Iraq, rose to a seven-year high in Oslo after better-than-expected results from its latest well at Tawke in northern Iraq boosted expectations over its output.
DNO climbed as much as 7.9 percent to 15.80 kroner, the highest intraday level since May 2006, and traded up 7.1 percent by 1:15 p.m. local time. That makes DNO the biggest climber on the Oslo stock exchange’s benchmark OSEBX index today. About 5.8 million DNO shares have been traded so far, almost three-times the average daily volume during the past three months.
“The exceptional results from Tawke-20 and Tawke-23 have fundamentally changed our approach to developing this field and also our expectations for its performance,” Chairman Bijan Mossavar-Rahmani said. “By any measure, these are prolific wells tapping into what increasingly feels like a sea of oil.”
DNO’s latest well, at deep Tawke-23 in Kurdistan, tested at more than 9,000 barrels a day, it said in a statement. That puts output at the field at a record 32,500 barrels a day, it said.
“These well results are even better than those from the first horizontal, and sets a new record for the company,” Pareto Securities AS said by e-mail. “The solid results make it increasingly likely that the company will lift its planned peak production level at Tawke from 200,000 barrels a day to a higher level, probably around 300,000 barrels a day.”
DNO, the first foreign company to drill for oil in Iraq after the U.S.-led invasion in 2003, is continuing exploration at the Tawke field as it seeks to boost output. It has been caught in a conflict between the semi-autonomous Kurdistan Regional Government and central Iraqi authorities over revenue sharing, contracts and land that forced it to sell output into the local market rather than export it abroad.
“With construction and tie in of the Kurdish export pipeline soon to be completed, exports could potentially start around yearend,” Pareto said. “A prerequisite for this to happen will be either a breakthrough in KRG-Baghdad relations, or alternatively the KRG may choose to export directly to Turkey without Bagdad’s consent, but this will further heat up the dispute with Bagdad.”
DNO is the operator of Tawke with a 55 percent stake. Genel Energy Plc (GENL) has 25 percent, and the Kurdistan Regional Government the remaining 20 percent.
DNO shares, up 53 percent in the past year, are supported by reports that oil majors including Chevron Corp. (CVX:US) and Total SA (FP) are looking to buy assets in Kurdistan. The region has potential 45 billion barrels of oil reserves and 3 trillion to 6 trillion cubic meters of gas, according to the regional government.
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