June 12 (Bloomberg) -- DNO ASA, the Norwegian oil producer focused on northern Iraq, fell for a second day after Islamist insurgents seized several cities south of the Kurdistan region where it operates.
While no violence has been reported in the semi-autonomous region, the Oslo-based company fell as much as 5.7 percent and traded 0.5 percent lower at 22.19 kroner a share as of 2:01 p.m., extending losses to 6.4 percent over the last two days.
“When the unrest is at this level and terror groups are involved, the stock will never thrive,” analyst Teodor Sveen Nilsen of Swedbank First Securities said in a phone interview. “The unrest is 150 kilometers from DNO’s Tawke field and might as such not have a big impact, but investors have a lot of others stocks to choose from and will react negatively when faced with uncertainty.”
DNO, the first foreign oil company to drill in Iraq after the U.S.-led invasion in 2003, got almost 80 percent of its production from the Kurdish region of the country’s north in the first quarter. The area is situated north of Mosul, Iraq’s second-biggest city, which was seized by militants of the Islamic State in Iraq and the Levant this week.
The violence has raised the prospect of a resurgence of sectarian conflict in Iraq, the second-biggest producer of the Organization of Petroleum Exporting Countries, as Prime Minister Nouri al-Maliki’s Shiite-led government struggles to control Sunni-majority regions.
DNO spokesman Henrik Schwabe couldn’t immediately comment, he said in an e-mail.
Swedbank downgraded DNO to neutral from buy on “increased political risk,” it said in a note yesterday. “It’s escalated more than I had thought,” Sveen Nilsen said today.
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