Category: Kurdistan News

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DNO Adds New Oil Reserves

DNO ASA, the Norwegian oil and gas operator, has announced it replaced 87 percent of 2020 production through additions to its proven (1P) reserves notwithstanding reduced activity in the wake of low oil prices.

In the Kurdistan region of Iraq, the Company replaced 111 percent of last year’s production through additions to 1P reserves.

Yearend 2020 Company Working Interest (CWI) 1P reserves totaled 201 million barrels of oil equivalent (MMboe) compared to 206 MMboe at yearend 2019, after adjusting for 35 MMboe of production and 30 MMboe of upward technical revisions.

DNO exited the year with 332 MMboe of CWI proven and probable (2P) reserves and 507 MMboe of CWI proven, probable and possible (3P) reserves. DNO’s CWI contingent (2C) resources stood at 152 MMboe.

At yearend 2020, DNO’s 1P reserves life stood at 5.8 years, its 2P reserves life at 9.6 years and its 3P reserves life at 14.6 years; all were up slightly from 2019 levels.

On a gross basis, yearend 1P reserves at the Tawke license in Kurdistan containing the Tawke and Peshkabir fields climbed to 234 million barrels of oil (MMbbls) from 228 MMbbls a year earlier. Tawke license 2P reserves stood at 394 MMbbls at yearend 2020 (400 MMbbls in 2019) and 3P reserves at 605 MMbbls (641 MMbbls in 2019).

Across its North Sea portfolio at yearend 2020, on a CWI basis, DNO’s 1P reserves stood at 41 MMboe, 2P reserves at 64 MMboe and 3P reserves at 96 MMboe. The Company’s North Sea 2C resources totaled 120 MMboe.

At yearend 2020 and on a gross basis, at the Baeshiqa license in Kurdistan containing two large structures with multiple independent stacked target reservoirs, 2C resources stood at 43 MMbbls, following successful drilling and testing of the exploration Baeshiqa-2 and Zartik-1 wells. No reserves were recorded at the Baeshiqa license at yearend 2020 pending conclusion of the ongoing appraisal activities to determine commerciality.

“All things considered, from a reserves replacement perspective DNO had a stellar year in 2020 notwithstanding the sharp cuts in our spend and the challenges of keeping operations going in the face of Covid restrictions in movement of our people, contractors and supplies,” said Bijan Mossavar-Rahmani, DNO’s Executive Chairman.

International petroleum consultants DeGolyer and MacNaughton (D&M) carried out an independent assessment of the Tawke and Baeshiqa licenses in Kurdistan. Gaffney, Cline & Associates (GCA) carried out an independent assessment of DNO’s licenses in Norway and the United Kingdom.

(Source: DNO)

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DNO Buys Exxon’s Stake in Iraqi Oilfield

DNO ASA, the Norwegian oil and gas operator, has announced the acquisition of ExxonMobil‘s 32 percent interest in the Baeshiqa license in the Kurdistan region of Iraq, doubling DNO’s operated stake to 64 percent (80 percent paying interest), pending government approval.

The Company plans to continue an exploration and appraisal program on the license while fast tracking early production from existing wells in 2021.

DNO has already demonstrated proof of concept of producing through temporary test facilities, having delivered 15,000 barrels of 40o API oil and 22o API oil for export from the Baeshiqa-2 and Zartik-1 wells, respectively.

In November 2019 DNO issued a notice of discovery on the Baeshiqa license after flowing hydrocarbons from several Jurassic and Triassic zones to surface in the 3,204 meters (2,549 meters TVDSS) Baeshiqa-2 exploration well. Following acid stimulation, the zone flowed variable rates of light oil and sour gas.

Two zones flowed naturally at rates averaging over 3,000 barrels of oil per day (bopd) of light gravity oil each and another averaged over 1,000 bopd also of light gravity oil. Subsequent analyses on surface samples collected during testing confirm that the Triassic reservoirs contain saturated oil with a gas cap.

An exploration well was completed in 2020 on a second structure (Zartik) some 15 kilometers southeast of the Baeshiqa-2 discovery well. The 3,021 meters (2,322 meters TVDSS) well tested hydrocarbons to surface from several Jurassic zones, with the uppermost zone flowing naturally at rates averaging over 2,000 bopd of medium gravity oil.

The Company currently estimates gross license contingent recoverable resources from three of the tested zones in the two wells ranging from 12 million barrels of oil (mmbbls) (1C) to 156 mmbbls (3C), with a 2C volume of 43 mmbbls.

“By increasing our stake in the Baeshiqa license now, we demonstrate our belief in its ultimate potential,” said Bijan Mossavar-Rahmani (pictured), DNO’s Executive Chairman. “Following the stabilization of oil prices and export payments in Kurdistan, DNO is stepping up spending on new opportunities,” he added.

DNO acquired its first 32 percent interest from ExxonMobil and assumed operatorship of the Baeshiqa license in 2018.

The 324 square kilometer license is situated 60 kilometers west of Erbil and 20 kilometers east of Mosul. The license contains two large structures, Baeshiqa and Zartik, which have multiple independent stacked target reservoir systems, including in the Cretaceous, Jurassic and Triassic. The remaining partners in the license include TEC [Turkish Energy Company] with a 20 percent paying (16 percent net) interest and the Kurdistan Regional Government with a 20 percent carried interest.

In addition to the Baeshiqa license, DNO also operates the Tawke license containing the Tawke and Peshkabir fields in Kurdistan. Gross operated production from the Tawke license averaged 110,300 bopd in 2020.

(Source: DNO)

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Dana Gas to Increase Drilling in Iraqi Kurdistan

Dana Gas PJSC, the Middle East’s largest regional private sector natural gas company, today announced its Preliminary Unaudited Financial Results for the full year ended 31 December 2020.

The Company reported a Net Profit of $36 million (AED 131mm) versus $88 million (AED 322mm) in 2019, excluding one-off non-cash impairments and other income. Including these one-offs, the Company reported a Net Loss of $376 million (AED 1.4bn) versus a Net Profit of $157 million (AED 575mm).

A total of $412 million (AED 1,51bn) of impairments were incurred mostly related to the sale of Dana Gas Egypt onshore assets.

Dana Gas’s continued operations (Kurdistan Region of Iraq) contributed an annual net profit of $32 million reflecting the profitability of the remaining business despite the challenging year caused by the COVID-19 pandemic.

Revenue was $349 million (AED 1.27bn) in 2020 compared to $459 million (AED 1.68bn) in 2019 due to both lower realised prices and lower production in Egypt.

The Company’s robust, long-standing programme to control operating expenses helped to effectively navigate the challenging market environment in 2020. G&A costs were reduced by a further 20% year-on-year.

Dana Gas fully redeemed its outstanding Sukuk on schedule in October 2020. The Company closed the year on a strong financial footing, and maintains a positive financial outlook for 2021.

Dr Patrick Allman-Ward (pictured), CEO of Dana Gas, commented:

“The world experienced unprecedented shocks in 2020 with the COVID pandemic and its impact on the global petroleum markets with prices collapsing to levels not seen for over 20 years. Nevertheless, Dana Gas has shown real resilience both from an operational as well as financial perspective.

“When the pandemic struck, our first priority was the health and safety of our staff. However, we managed to keep our operations on-stream by implementing the most stringent health and safety measures. We not only managed to keep production levels up, but we also carried out a de-bottlenecking project on our Khor Mor plant in July which added a total of 50 MMscf/d of production capacity. In December we consistently obtained record production levels of over 440 MMscf/d. This extraordinary operational performance under the most testing of circumstances is testament to the commitment, dedication and hard work of our staff who have been outstanding in this challenging time.

“Despite the challenges imposed by the global pandemic, we exited the year in a robust financial position with a strong balance sheet, having agreed upon the sale of our Egypt onshore assets, redeeming our outstanding Sukuk and entering into a new credit facility at a lower interest rate.

“In 2021, we aim to advance the development of our world class assets in the KRI, where over 90% of Dana Gas’s proven reserves of over 1 billion boe are located, while concurrently moving ahead with our plans to prepare for the drilling of the next exploration well in Block 6 in Egypt, which holds exciting, material upside potential.“

Operations & Production

Average group production declined 5% during 2020, averaging 63,200 boepd versus 66,200 boepd in 2019. Production was boosted by a 2% jump in output from the KRI, which reached 32,250 boepd. This helped to offset a drop in production from Egypt, which fell 8% to 30,300 boepd versus 33,000 boepd in 2019 as a result of natural field declines.

Fourth quarter 2020 average group production was up 2% to 63,600 boepd. The KRI added 9% to reach 33,250 boepd in fourth quarter production because of the successful completion of the plant bypass project.

The KRI and Egypt operations have continued without interruption and remain fully functioning, un-impacted by the Covid pandemic. The restarting of the expansion plans in the KRI demonstrates that all the parties working on the project are fully committed to executing the expansion project as quickly and as safely as possible. The Pearl consortium remains focused on completing the first 250 MMscf/d gas processing train in Q1 2023 and is also examining ways to bring forward the current schedule.

In 2021 the Company will prepare for the drilling of up to five development wells in the KRI which will begin the following year. It is also moving ahead on the evaluation of the highly prospective Block 6 in Egypt, interpreting the infill seismic data that was acquired in mid-2020 and planning for drilling the next exploration well in 2023.

Sale of Egypt assets

In October 2020 Dana Gas entered into a binding agreement with IPR Wastani Petroleum Ltd, for the sale of its onshore Egyptian producing oil and gas assets for a cash consideration of up to $236 million including contingent payments. The sale is on track for completion in H1 2021. The Company will retain its interests in its exciting offshore exploration concession, North El Arish (Block 6) which contains material gas resource potential in excess of 20 Tcf.

Liquidity and Collections

The Group’s cash balance at year-end stood at $108 million. The Board is considering transferring voluntary reserves into retained earnings to support dividend capacity subject to shareholder approval.

The Group collected a total of $182 million in 2020 (2019: $285mm) with Egypt and KRI contributing $80 million (2019: $138mm) and $102 million (2019: $139mm) respectively.
As of 31 December 2020, the Company’s Egypt receivables stood at $130 million (AED 477mm).

In the KRI, regular payments have been received since March 2020. The KRG maintained its commitment to pay its invoices on time despite facing fiscal challenges throughout the year. Currently, $39 million is outstanding (DG 35% share). The Company has received notification from the KRG on the mechanism for settlement of the outstanding receivables.

(Source: Dana Gas)

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DNO announces 2020 Interim Results

DNO ASA, the Norwegian oil and gas operator, today reported interim 2020 revenues of USD 615 million, down a third from a year earlier in the wake of weak oil prices triggered by the pandemic and global economic contraction.

Net production totaled 95,100 barrels of oil equivalent per day (boepd), down nine percent, as the Company cut spending to preserve cash.

For the full year, DNO reported a net loss of USD 286 million driven by the lower revenues and pre-tax asset impairments of USD 276 million, most of which were reported in the third quarter.

With solid cash flow from operations of USD 236 million and North Sea tax refunds of another USD 236 million, DNO exited 2020 with a cash balance of USD 477 million, essentially unchanged from the start of the year, following repayment of USD 161 million in bond debt.

The Company drilled six exploration wells last year leading to three likely commercial discoveries, including Røver Nord and Bergknapp in Norway and Zartik in Kurdistan’s Baeshiqa license. The discoveries will be considered for fast-track development and tie-in to existing offshore or onshore infrastructure.

DNO will drill two potentially high impact exploration wells this year, notably the much anticipated Edinburgh prospect that straddles the Norway-United Kingdom border in which the Company holds a 45 percent stake and the Gomez prospect offshore Norway in which the Company holds an 85 percent stake.

The total 2021 well count, including development wells, will increase to 27 from 17 last year.

Temporary Norwegian petroleum tax incentives are driving other stepped-up investments. The Company is proceeding to concept selection for the operated Brasse field, accelerating infill drilling at Ula, Tambar and Brage fields in 2021 and evaluating the Iris/Hades, Røver Nord, Alve Gjøk, Orion/Syrah and Trym South discoveries for project sanction in 2022.

DNO projects operational spend of USD 700 million this year, up from USD 511 million in 2020.

The Company achieved a net 2P reserve replacement ratio of 64 percent in 2020, notwithstanding limited activity, ending the year with 332 million barrels of oil equivalent (mmboe) of proven and probable reserves, down 13 mmboe from yearend 2019, according to preliminary figures.

More here:

(Source: DNO)

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New COVID-19 Isolation Unit at Soran Hospital

Ministry of Health Kurdistan, UNFPA open COVID-19 isolation unit at Soran maternity hospital

The Ministry of Health of the Kurdistan Regional Government through the Directorate of Health in Erbil, with support from UNFPA opened a COVID-19 isolation unit at the Soran Maternity hospital in Erbil on 3 February 2021.

The isolation unit has the capacity to treat up to six women at once. It was equipped with medical supplies, Personal Protective Equipment, six examination beds and two delivery beds worth US$ 100,000.

The facility that provides daily around-the clock care, is fully equipped by UNFPA and the Soran hospital administration. The staff are also provided with PPEs and medical supplies and have been trained on national guidelines on management of pregnancy and child birth during COVID19.

In addition to the isolation unit at Soran maternity hospital, UNFPA, with funding from the Swedish Government, supported the establishment of isolation units for COVID-19 at maternity hospitals in Zakho, Sulaymaniyah and Halabja.

UNFPA Deputy Representative, Mr. Himyar Abdulmoghni spoke on the occasion and said:

“All childbirths should be safe at all times and no woman should be denied quality reproductive health services under any circumstances, including crises and pandemics. We are working with the Ministry of Health in the Kurdistan Region to ensure quality services to all pregnant women and safe deliveries despite COVID-19.”

Dr Mahabad Dilawar, the Head of Soran Maternity Hospital, thanked UNFPA for the efforts in building the isolation unit saying:

“We are saving time and cost for pregnant women who had to travel long distances to deliver their babies. Through this isolation unit, we serve quality services to pregnant women with COVID-19.”

UNFPA supports the Kurdistan Regional Government to strengthen the health system’s capacity, provide essential supplies, improve access to sexual and reproductive health and gender-based violence services, and promote risk communication and community engagement.

(Source: UN)

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Deloitte Report on Kurdistan Region Oil and Gas

Deloitte report on Oil and Gas review in the Iraqi Kurdistan Region – Q1 to Q3 of 2020

The KRG’s Regional Council of Oil and Gas Affairs has published a report containing verified statistics covering the Kurdistan Region’s oil exports, consumption and revenues for period 1 January 2020 to 30 September 2020.

The report, available in Kurdish, English and Arabic, provides a quarterly analysis of oil export information and average prices.

The data verification was performed by Deloitte.

Transparency being central to the cabinet agenda, the KRG regularly assesses what additional disclosures would enhance the transparency of its oil and gas sector. Accordingly, from 2019 the KRG started providing information on the prepayment balances it owes to oil traders and in 2020 disclosures are further extended to include reconciliation between production and exports and local consumptions.

The Regional Council for Oil and Gas Affairs acknowledges the positive feedback received so far from domestic and international stakeholders. The council reiterates its commitment to the people of Kurdistan that Deloitte will continue to independently review the region’s oil and gas sector.

A frequently asked questions handbook (also available in Kurdish, English and Arabic) will help readers to understand the report’s contents.

Click here to download the reports.

(Source: KRG)

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GKP Shares Rise following Update

By John Lee.

Shares in Gulf Keystone Petroleum (GKP) closed the day up more than 5 percent on Wednesday, after the Kurdistan-focused oil producer provided an operational and corporate update to the markets.

Jón Ferrier, Gulf Keystone’s Chief Executive Officer, said:

“I am pleased to report that throughout 2020, Gulf Keystone successfully managed the challenging operating environment delivering record annual average production of over 36,600 bopd and in December, record monthly average production of over 43,000 bopd.

“Planned debottlenecking works have increased PF-1 production capacity to more than 30,000 bopd and the Company expects to deliver average gross production in 2021 of 40,000 to 44,000 bopd. We look forward to updating guidance once conditions allow resumption of the 55,000 bopd expansion.

“I would like to thank the team at GKP for their dedication and professionalism in what has been a challenging year for the E&P sector. I look forward to working closely with my successor, Jon Harris, to effect a smooth handover of responsibilities and I am confident of the continuing success of the Company.“

Operational

  • GKP’s continued strong focus on safety resulted in no Lost Time Incidents during 2020.
  • The Company has effectively managed to minimise the impact of COVID-19 on our staff and contractors and ongoing production operations.
  • In 2020, average gross production at Shaikan was 36,625 bopd, exceeding the top end of the guidance range and the highest annual average production rate to date from the field.
  • The previously announced PF-1 plant debottlenecking work has delivered production capacity in excess of 30,000 bopd.
  • As a result, Shaikan Field production has increased and is currently c.44,000 bopd.

Financial

  • Total cash received from the Kurdistan Regional Government (“KRG”) during 2020 for payments of crude oil sales was $129 million ($101 million net).
  • As a result of increased production and the recent improvement in the oil price, the December 2020 crude oil sales invoice submitted to the KRG was $18.0 million ($14.1 million net), up 65% from the previous month.
  • As at 12 January 2021, the Company had a cash balance of $147 million.

Corporate

  • Jon Harris to join as Chief Executive Officer and Board member on 18 January 2021.

Outlook

  • Guidance for 2021 is: 40,000 to 44,000 bopd average gross production, $15 to $20 million net Capex and $2.5 to $2.9/bbl Opex.
  • Guidance will be updated once conditions allow well workovers and/or the restart of the drilling programme to achieve 55,000 bopd.
  • Following receipt of the previously announced proposal to repay the arrears from the outstanding November 2019 to February 2020 invoices, totalling $73.3 million (net), the Company continues to engage with the KRG and will provide an update in due course.
  • The Company remains committed to maintaining its strong financial position and, as conditions continue to improve, will look to return to a balance of growth focussed field development investments and shareholder distributions.

(Sources: GKP, Yahoo!)

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ShaMaran achieves 40m Barrels Production at Atrush

ShaMaran Petroleum has announced that the January 2021 interest payment due on its 12% senior unsecured bonds due 2023 (ISIN: NO 001082645.6) has been timely made to all Bondholders.

In addition, ShaMaran said the Atrush field total cumulative crude oil production has exceeded 40 million barrels.

The Atrush field is located 85 km northwest of Erbil and is one of the largest new oil developments in the Kurdistan Region of Iraq.

The field was first discovered in 2011 and oil production started in July 2017. In its fourth year of production, the Atrush field has sold all its production to the Kurdistan Regional Government of Iraq at international market prices less a discount based on quality and transportation charges.

ShaMaran President and Chief Executive Officer Dr. Adel Chaouch said:

“Following a challenging 2020 for the oil industry in Kurdistan, ShaMaran is pleased to start off 2021 with the full and timely payment of the semi-annual interest owed to our Bondholders.

“Our achievement of this 40 million barrel production milestone also demonstrates the ability of Atrush field to maintain stable production even through the past difficult times.  We look forward to future achievements.“

(Source: ShaMaran)

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KRG proposes new Minister of Natural Resources

By John Lee.

The Prime Minister of the Kurdistan Regional Government (KRG), Masrour Barzani, has nominated Dr. Kamal Atroshi to the post of Minister of Natural Resources, a position which includes responsibility for the oil and gas portfolio.

A statement from KRG spokesperson Dr. Jotiar Adil said, “It is our hope that the Kurdistan Parliament includes this topic in its next session and provides a vote of confidence“.

According to his Linked-In profile, Dr al-Atroshi was educated in Iraq and France, and has worked extensively in the oil sector in Kuwait. He has held positions with the Kuwait Foreign Petroleum Exploration Company (KUFPEC), Gas & Oil Field Services Company (GOFSCO), and Total.

(Sources: Kurdistan Regional Government, Linked-In)

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Khor Mor Gas Plant reaches Record Production

Dana Gas has announced the production of sales gas from Pearl Petroleum‘s Khor Mor Gas Plant in the Kurdistan Region of Iraq (KRI) reached a new record level of 430MMscf/d on 15 December 2020.

Fourth quarter’s average gas production as of 15 December 2020 is 400MMscf/d, an 8% increase on Q4 2019’s average production of 370MMscf/d.

Pearl Petroleum has also restarted expansion plans in the KRI on the 15 December. This follows the suspension of work in March 2020 due to Covid-19 restrictions. All parties working on the project are fully committed to executing the expansion project as quickly and as safely as possible.

The Company expects to complete the first 250 MMscf/d gas processing train in Q1 2023 and is also examining ways to reduce the schedule further.

In line with the Kurdistan Regional Government (KRG) commitment to review the outstanding December 2019 to February 2020 invoices totalling $30 million, Dana Gas notes Pearl Petroleum’s confirmation of receipt of a payment plan proposal from the KRG to pay down past receivables during 2021 as long as Brent remains above $50/bbl.

Pearl Petroleum continues to engage constructively with the KRG on this matter to ensure timely payment. The KRG has maintained regular monthly payments since March 2020.

Dr Patrick Allman-Ward, CEO of Dana Gas, commented:

“Our joint operations at Pearl Petroleum continue to set new records with production output whilst maintaining an excellent HSSE track record, validating our long-term strategy to concentrate on further developing our world-class fields in the KRI. We are getting tremendous support from the KRG, which has given us the green-light to restart the civil engineering works under strict health protocols and controls.

“This clears a major hurdle and puts us on a path for first gas from the new train in Q1 2023. I am also pleased to provide an update on our Q4 average gas production, which is 8% higher at 400MMscf/d than in the same period last year.

“In addition, our commitment and contribution to the people of the KRI remains as strong as ever. Our partnership is now in its 12th year. 2020 has been very challenging due to the restrictions imposed by the global pandemic but the team has worked tirelessly to keep our operations ongoing throughout the year, adhering to strict health and safety protocol to ensure the continuous flow of gas to power the KRI’s electricity needs.”

(Source: Dana Gas)

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