DNO dragged into loss by Yemen troubles and soft oil price

The firm, in which RAK Petroleum has a 42.5 per cent stake, posted an operating loss of $69 million for the first quarter.

The Norwegian oil and gas company DNO yesterday reported an operating loss for the first quarter of this year because of the suspension of operations in war-torn Yemen, lower sales in Iraq's northern Kurdish region and weak oil prices.

The firm, in which RAK Petroleum has a 42.5 per cent stake, posted an operating loss of US$69 million due, in part, to a $27m writedown in Yemen arising from the halt of production in Block 32 and Block 43 as the security situation deteriorated.

In addition, lower local sales from the Kurdish region and weak oil prices led to a drop in revenue to $26m in the first quarter.

DNO suspended its operations in Yemen in March and relocated employees to Dubai.

It is not the only firm to halt operations in Yemen. Total of France, the largest company in Yemen, operating several fields and a liquefied natural gas terminal at Balhaf, said in March that it had evacuated all expatriate staff from Sanaa and Kharir, but was maintaining LNG production and exports via Balhaf.

Total had previously said that operations on its Block 10 in Yemen had been cut, with gas production maintained only for local power generation.

A year ago today, DNO reported a first-quarter net profit of $24m on operating revenue of $113m.

It is also struggling to recover payments owed, particularly from the semiautonomous Kurdish Regional Government.

The firm’s capital expenditure this year has been cut to an estimated $100m, out of which $35m was spent in the first quarter.

Gross production in the first quarter of this year from the Kurdish region, Yemen and Oman was 121,000 barrels of oil equivalent per day (boepd), of which the company interest in the production was more than 72,000 boepd.

Bijan Mossavar-Rahmani, the chairman of DNO and the executive chairman of RAK Petroleum, said last week that while DNO has its "hands full" and has not been looking at potential acquisitions, it would naturally "be on the radar" of any of the oil majors on the hunt.

DNO’s shares fell 1.13 per cent to 13.95 krone in noon Oslo trading.

Follow The National's Business section on Twitter