DNO International ASA, the Norwegian oil company focused on Iraq’s Kurdish region, rose to a record in Oslo trading after third-quarter earnings beat estimates.
The shares surged as much as 5.5 percent to 19.9 kroner, the highest since Bloomberg started compiling data. About 9.9 million shares had been traded as of 3 p.m., more than three times the daily average over the past three months.
DNO’s profit reached 282 million kroner ($45.5 million) in the third quarter, beating the 265 million-krone average estimate of seven analysts surveyed by Bloomberg. Production climbed to a record 52,780 barrels of oil equivalent a day on a working-interest basis. DNO reiterated a plan of increasing capacity at its Tawke field in Kurdistan to 200,000 barrels of oil a day, saying reserves at its main asset were on track to reach 1 billion barrels.
“The report leaves a strong impression and confirms our conviction of the upside potential in the share,” Teodor Sveen Nilsen, an analyst at Swedbank First Securities, said in an e-mail to clients. “The main reason for the strong earnings were higher-than-expected revenue” and low output costs.
DNO’s sales were 810 million kroner, beating the 758 million-krone average estimate of nine analysts.
DNO was the first foreign company to drill for oil in Iraq after the U.S.-led invasion in 2003 and gets more than 70 percent of its production from the semi-autonomous Kurdistan region in the country’s north.
It has been caught in a dispute between the region and the central authorities in Baghdad over revenue sharing, contracts and land, forcing it to sell oil on the local market at a discount to international prices.
Oil exports from Kurdistan through a government-run pipeline were halted in December over a payment disagreement.
DNO’s partner at Tawke, Genel Energy Plc., said last month the Kurdistan Regional Government has completed an export pipeline to Turkey with a capacity of 300,000 barrels a day that ties in to an existing link after a Baghdad-controlled metering station, giving Kurds control of the flow. DNO has said earlier it expects to have access to the pipeline.
“We are awaiting guidance from the Kurdistan Regional Government with respect to the status of the pipeline,” Executive Chairman Bijan Mossavar-Rahmani, said in a presentation in Oslo today. “My expectation is that when those arrangements are in place the Kurdistan operators with oil to put into the pipeline will do so.”
The KRG also expects to build a direct export pipeline to Ceyhan in Turkey within the next two years, adding to the region’s export capacity.