OSLO (Reuters) - Oil company DNO aims to boost production in the North Sea by making more acquisitions in the next 12 months after buying British rival Faroe Petroleum earlier this year, its executive chairman said on Wednesday.
Olso-listed DNO produces most of its oil and gas in the Kurdistan region of Iraq, but has said it plans to increase production in the North Sea to 50,000 barrels of oil equivalent (boepd) by 2021 from around 18,000 boepd in the first quarter.
DNO’s Executive Chairman Bijan Mossavar-Rahmani told a news conference the company expected the most growth to come from new acquisitions of producing assets rather than the organic growth, despite high prices for North Sea assets.
“There are enough assets on the market in Norway... We can pay the full price if the opportunities make strategic sense. I’m confident we will get there,” he said.
To achieve that, DNO said it would use proceeds from a planned bond issue to refinance existing DNO and Faroe bonds, and to have more flexibility in executing its growth strategy.
The company also said it aimed to increase stakes in its existing licenses on the Norwegian continental shelf to 30-50 percent and to take on more operatorships.
DNO’s total production in the first quarter rose by 36 percent from a year ago to 107,600 barrels of oil equivalent per day (boepd) from a year ago, of which 89,000 boepd were produced in the Kurdistan region of Iraq.
The company reported lower-than-expected first-quarter profit, hit by the impact of low oil prices in the last quarter of 2018 in Kurdistan, sending its Oslo-listed shares down 3.8 percent in the early trading.
The shares were down 2.8 percent by 1036 CET, underperforming the European oil and gas index, which was broadly flat.
DNO acquired Faroe Petroleum in January after raising its cash offer to 160 pence per share to win over reluctant shareholders in a hostile takeover.
The company said it expected full-year revenue to exceed $1 billion this year based on an estimated oil price at $70 a barrel, up from around $830 million last year, with the North Sea revenues accounting to about 30 percent of the total.
DNO plans to increase its total capital and exploration spending to $440 million in 2019 from $200 million last year, split between $240 million in Kurdistan and $190 million in the North Sea.
Around 50 percent of North Sea capital expenditure in 2019 will go to the Ula and Fenja field developments. The Fenja field is on track to start in 2021 and is expected to contribute a net 2,600 boepd, DNO said.
Reporting by Nerijus Adomaitis, editing by Gwladys Fouche/Louise Heavens/Jane Merriman