DNO (DNO) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue rose to USD 170.5 million, driven by higher Kurdistan production, improved local pricing, and increased North Sea liftings, despite planned maintenance reducing North Sea output.

• Net profit was USD 20 million, impacted by expensed drilling costs for Angel and Hummer prospects.

• Net production averaged 77,200 boepd, with Kurdistan contributing 63,200 boepd, North Sea 11,200 boepd, and West Africa 2,800 boepd.

• Cash balances stood at USD 919 million at quarter-end, with a net cash position of USD 134 million and equity ratio at 40%.

• Dividend maintained at NOK 0.3125 per share (USD 29 million), following a 25% increase last quarter.

Financial highlights

• Q3 revenues rose to USD 170.5 million, with North Sea revenues at USD 111.3 million and Kurdistan at USD 59.2 million, driven by higher sales volumes, gas prices, and overlift.

• Operating profit reached USD 31 million, up from a USD 3 million loss in Q2, while net profit was USD 20 million, down from USD 34-35 million in Q2 due to higher tax and expensed drilling costs.

• Operational cash flow was USD 112 million, down from USD 139 million in Q2 due to lower working capital adjustments.

• Free cash flow was USD 5.2 million in Q3 2024.

• Capital expenditures totaled USD 74.5 million, mainly in the North Sea.

Outlook and guidance

• Operational spend guidance for 2024 reduced by just under 10% to USD 570 million.

• North Sea production expected to ramp up with new fields (Trym, Andvare, Verdande, Bestla) coming online through 2027.

• Production guidance for Tawke PSC maintained at 80,000 gross for the year.

• Significant tax refunds expected in Norway in Q4 2025 due to exploration and development activity.

• Continued engagement with KRG for recovery of past due receivables; timing of recovery remains uncertain.