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Introduction & Market Context
DNO ASA (OB:DNO) presented its Q1 2025 interim results on May 15, 2025, highlighting production growth and progress on its transformative acquisition of Sval Energi Group AS. The Norwegian oil and gas operator reported improved financial performance compared to the previous quarter, with operations strengthening across its portfolio in Kurdistan, the North Sea, and West Africa.
Quarterly Performance Highlights
DNO reported Q1 2025 revenue of USD 188 million and operating profit of USD 28 million, showing recovery from the previous quarter’s loss. Net production reached 84,200 barrels of oil equivalent per day (boepd), an 8% increase from Q4 2024, with Kurdistan contributing 61,600 boepd, North Sea 19,300 boepd, and West Africa 3,400 boepd.
As shown in the following chart, DNO’s production has been on an upward trajectory over the past five quarters:
The company’s financial results showed improvement from Q4 2024, when it recorded an operating loss of USD 82 million. However, DNO still posted a small net loss of USD 4 million in Q1 2025, though this represents a significant improvement from the USD 98 million net loss in the previous quarter.
The following chart illustrates DNO’s financial performance trends over the past five quarters:
Strategic Initiatives
The most significant development for DNO is its USD 1.6 billion acquisition of Sval Energi Group AS, announced in early March 2025. The company reported that the transaction is on track to close by mid-year 2025 and will dramatically transform DNO’s portfolio, particularly in the North Sea.
Post-acquisition, DNO’s North Sea proven and probable (2P) reserves will quadruple to 189 million barrels of oil equivalent (MMboe), while 2C resources will increase to 246 MMboe from 144 MMboe. North Sea production will also quadruple to 80,000 boepd, making it the largest contributor to DNO’s overall production at approximately 60% of the total.
The following map illustrates DNO’s expanded footprint in the North Sea following the Sval acquisition:
To support the acquisition, DNO issued a new USD 600 million bond in Q1, marking the company’s 20th successful bond issue in 24 years. The company ended the quarter with a cash position of USD 1,473 million, positioning it well to complete the transaction.
The cash flow waterfall chart below shows how DNO built up its cash reserves during Q1 2025:
Exploration Success
DNO continues to deliver exploration success in the North Sea, announcing two new discoveries offshore Norway during Q1 2025: Kjøttkake and Mistral. These discoveries added 26 MMboe of net recoverable resources to the company’s portfolio.
The Kjøttkake discovery, where DNO holds a 40% operated interest, is estimated to contain between 39 and 75 MMboe in Paleocene injectite sandstones. Located 27 kilometers northwest of the Troll C platform and 44 kilometers southwest of the Gjøa platform, the discovery benefits from proximity to existing infrastructure. Following delineation through a horizontal appraisal sidetrack, DNO has launched development concept studies to quickly commercialize the find.
The following map shows the location of the Kjøttkake discovery and surrounding infrastructure:
DNO’s 2025 exploration program includes five wells, with three already drilled and two deemed commercial discoveries. The company recently secured a rig to drill the Page prospect in the second half of 2025, following up on its 2024 Othello discovery within the same operated license.
Regional Operations
In Kurdistan, where DNO operates the Tawke license with a 75% interest, production increased to 82,100 boepd in Q1 2025, representing an 11% rise quarter-on-quarter. The company conducted 17 rigless well interventions and one well workover during the quarter, helping to stabilize production in reservoirs that typically decline by 15-20% annually.
DNO’s Kurdistan oil was sold at its Fish Khabur terminal at USD 35 per barrel, with payments made ahead of deliveries. Tawke license sales averaged USD 20 million net to DNO per month, generating approximately USD 10 million in free cash flow. The company maintains strict capital discipline in the region, with no Kurdistan drilling planned for 2025.
Financial Analysis
DNO’s operational cash flow improved to USD 100 million in Q1 2025, up from USD 82 million in Q4 2024. Net investing activities totaled USD -109 million, largely consisting of USD 113 million in organic asset investments, offset by dividends from equity-accounted investments in West Africa.
The company’s capital structure has evolved over the past year, with cash deposits increasing substantially in Q1 2025 following the new bond issue. However, net cash has declined steadily, and the equity ratio has decreased from 49% in Q1 2024 to 29% in Q1 2025, reflecting the company’s increased leverage ahead of the Sval acquisition.
Forward-Looking Statements
DNO’s Board of Directors approved a dividend of NOK 0.3125 per share payable in June, representing NOK 1.25 per share on an annualized basis. This continues the company’s commitment to shareholder returns despite ongoing investments.
Looking ahead, DNO expects the Sval acquisition to position it among the top ten producers in Norway. The company plans to maintain higher North Sea output through a pipeline of discoveries and infill opportunities being matured for project sanction. While focusing on integrating Sval’s assets, DNO remains committed to organic growth through exploration, particularly in the North Sea.
Full presentation:
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