DNO said that it has put off most discretionary drilling and capital projects across the portfolio at a later date
Norwegian oil and gas company DNO said that it will bolster its cash position by implementing a 35% reduction in its 2020 budget, thereby saving up to $350m.
The company, which is focused on the Middle East and the North Sea, said that it had identified where it can make the cuts across all its spend categories. Furthermore, the oil and gas firm is said to have been engaged in protecting its employees and operations and in preserving its cash position to handle the adverse impact of the Covid-19 pandemic.
The company said that it has put off most discretionary drilling and capital projects across the portfolio at a later date.
In the UK, the Norwegian oil and gas firm said that it has no plans for any drilling and has suspended and deferred the remainder of the Schooner and Ketch decommissioning programme to 2021/2022.
It has also renegotiated service contracts for savings and extended payment terms where it operates. Besides, the company is said to be in talks with its partners in the North Sea to cut down operating and other costs and postpone non-critical projects where it is not the operator.
DNO’s cash balance at the end of the first quarter of 2020 is $543m compared to $486m it had at the end of 2019.
The Norwegian oil and gas operator said that its revenues of $206m in Q1 2020 were affected largely by lower oil prices and a net loss of $40m following impairments of its North Sea assets, which was also due by reduced oil prices.
The company said that its production split for the first quarter is 80:20 between the Kurdistan region in Iraq and the North Sea.
Its share of production averaged 99,857 barrels of oil equivalent per day (boepd) in Q1 2020 with Kurdistan producing 81,221 barrels of oil per day (bopd), while the North Sea contributing 18,636boepd.
According to DNO, its gross production at the operated Tawke and Peshkabir fields averaged 61,493 barrels and 53,714bopd, respectively. The company had completed five development wells in the license during the first quarter.
It is also said to have released four drilling rigs in Kurdistan and is continuing to use its operated workover rig to service production wells. Of these, some of the wells have been shut due to the prevailing oil prices and payment delays.
The company has cold stacked a drilling rig at each field and is said to be in a position to mobilise them quickly depending on the situation.
DNO management comments on the company’s plan of action
DNO executive chairman Bijan Mossavar-Rahmani said: “One of the first to hit the brakes, DNO is positioned to be one of the first to press down on the accelerator with signs of sustained market recovery, notably through short-cycle drilling in Kurdistan.
“Lifting costs below USD 5 per barrel in Kurdistan give DNO competitive advantage when oil prices are weak and strong cash flow when oil prices recover.”