DNO International has announced its interim results for the fourth quarter and full year 2008.
DNO has during the last years followed a strategy which has made the company prepared for a possible downturn in the oil and gas industry. DNO's activities have been focused on low cost, high potential areas, avoiding long-term future capital commitments.
In the fourth quarter DNO commenced the remaining work to connect the Tawke pipeline to the northern pipeline system in Iraq operated by the North Oil Company (NOC). The initial drilling phase on the Tawke field was completed as the gross initial cumulative well capacity from the field is significantly in excess of the 50,000 bopd capacity of the Tawke facilities.
"As a result of the good progress made on the Tawke development during 2008 we are now preparing for increased production at low cost from a substantial reserve base, without further investments. This put us in a good position to meet the challenges and opportunities in today's market", said Helge Eide, Managing Director of DNO International ASA.
The total operating revenues in the fourth quarter was NOK 217 million, down 33 per cent compared to the previous quarter, primarily as a result of lower oil prices. The total operating revenues for the year was up 4 per cent to NOK 1,376 million, which was primarily a result of higher oil prices
As communicated in a stock exchange notification 13 February, 2009, DNO has in the fourth quarter 2008, in accordance with IFRS, recorded NOK 927 million in non-cash impairment losses. This is as a result of impairments on both DNO's equity investment in Det norske oljeselskap ASA and other available for sale share assets, an adjustment of DNO's carrying value on block 43 in Yemen as well as an impairment of the company's deferred tax asset.
For the fourth quarter, netback cashflow before impairment amounted to NOK -29 million (NOK 143 million). For the full year 2008, the netback before impairment was NOK 453 million (NOK 690 million).
The operating profit (EBIT) for the fourth quarter amounted to NOK -298 million (NOK 65 million). For the full year DNO reported an EBIT of NOK 9 million (NOK 492 million).
Net profit in the fourth quarter ended at NOK -977 million (NOK -30 million before discontinued operations). The net profit for the full year was NOK -904 million (NOK 91 million before discontinued operations). This includes total non-cash impairment charges related to oil and gas assets, financial assets and tax assets of NOK 927 million in Q4 2008.
With increased production combined with substantial reduction in investments level, DNO will be in a favorable position in the current financial environment. DNO will remain loyal to its strategy with focus on low cost high potential areas, but going forward DNO will also more actively pursue new strategic options including consolidation opportunities within the oil and gas industry.