DNO unveils big Gulf, Iraq acquisition plans
Oslo, September 7, 2011
Norwegian oil company DNO could buy more oil and gas assets in Iraq, Yemen, the UAE, Oman and Tunisia once it completes the $250 million acquisition of assets from UAE-based RAK Petroleum, said its chairman on Wednesday.
DNO had agreed to buy assets owned by major shareholder RAK Petroleum in July. Once the deal is completed - it needs to be approved at an extraordinary general meeting of DNO in December - DNO would hold oil and gas fields in these five countries and could acquire more.
'We are looking opportunistically at other assets that may be priced well,' Bijan Mossavar-Rahmani told Reuters on Wednesday in an interview.
'Following the merger, DNO will be in Iraq, Yemen, Oman, the UAE and Tunisia ... It can use each of these platforms to grow more in those countries.'
Mossavar-Rahmani is both the chairman of DNO's board and chief executive of RAK Petroleum, which has owned 30 per cent of DNO's shares for more than a year and would own 40 per cent with the deal.
Talking generally about the attractiveness of oil and gas opportunities in the region, the chairman said the north of Iraq was by far the most attractive part of the region.
'Obviously the most interesting part in the Middle East is Kurdistan,' he said.
'Given the upheavals in the Middle East and the upheaval in global equities markets, there are a lot of distressed oil and gas assets in the Middle East, which for someone with the appetite for political risk and a presence in the region could create opportunities.'
'There are opportunities in Egypt and Yemen, clearly Libya is going to be a major focus for majors and for mid-sized oil companies. South Sudan could provide opportunities too.'
Last month, DNO announced a share buyback which it said was prompted by the turmoil on the financial markets and the fact that it has a 1.7 billion Norwegian crowns ($318 million) cash pile.
Mossavar Rahmani said DNO was allowed by its shareholders to buy back up to 80 million shares and had so far bought back 9.5 million. He would not say whether it would buy back the full amount allowed nor when it would do so.
'It will depend on market conditions,' he said. 'Obviously if the share price goes down a lot, we have better reason to buy the shares.'
DNO's prize asset is the Tawke field in Iraqi Kurdistan, estimated to hold 636 million barrels, which has been mired in a lengthy dispute with Iraqi lawmakers.
DNO received its first ever payment, $104 million, in May for oil produced at its Kurdish fields and sent outside the region.
The Baghdad government had refused to pay companies for oil exported from Kurdistan as it said the contracts, signed with the regional government, were invalid.
Production is currently at around 50,000 barrels per day but can produce twice as much.
Output has been held back for technical reasons but the company has said that further investments at the field would depend on getting clarification regarding payments.
'Obviously if we were getting paid according to the producing-sharing contract, we would be making additional investments and working a lot harder to export a lot more, subject again to the infrastructure limitations and government requirements,' said the DNO chairman.-Reuters