DNO Q2 2025 slides: Revenue surges 37% as North Sea acquisition drives growth

Introduction & Market Context

DNO ASA (OB:DNO) reported a significant boost in its second quarter 2025 performance, driven primarily by its recent acquisition of Sval Energi Group AS. The Norway-based oil and gas company saw its revenue jump 37% quarter-over-quarter, continuing the positive momentum observed in Q1 2025.

The company’s strategic pivot toward expanding its North Sea operations is bearing fruit, with the Sval acquisition contributing to earnings from June 1. This shift comes as DNO continues to navigate geopolitical challenges in its Kurdistan operations, where drone strikes in mid-July impacted production facilities.

Quarterly Performance Highlights

DNO reported Q2 2025 revenue of USD 258 million, a 37% increase from USD 188 million in the previous quarter. Operating profit saw an even more dramatic improvement, surging 206% to USD 86 million from USD 28 million in Q1.

As shown in the following financial results chart, DNO has demonstrated consistent revenue growth over five consecutive quarters, while operating profit has rebounded strongly:

Despite the impressive top-line and operational performance, the company posted a net loss of USD 7 million for the quarter, slightly worse than the USD 4 million loss reported in Q1 2025. According to the presentation, this was due to higher financing costs and taxes offsetting revenue gains.

Net production increased 10% to 92,600 barrels of oil equivalent per day (boepd), with 56,100 boepd from Kurdistan, 33,300 boepd from the North Sea, and 3,200 boepd from West Africa. The North Sea contribution includes production from Sval Energi assets from June 1 onward.

The following chart illustrates DNO’s production growth trajectory across its operational regions:

Strategic Initiatives

The USD 1.6 billion acquisition of Sval Energi represents a transformative move for DNO, more than doubling its total balance sheet size since year-end 2024 and significantly expanding its North Sea footprint. Post-acquisition, DNO now has production from over 30 North Sea fields.

Executive Chairman Bijan Mostavaramani’s statement from the Q1 earnings call that "We want to grow more in the North Sea and use the size and scale to do larger transactions" is clearly being executed upon with this acquisition.

The company is advancing its North Sea exploration program with several promising prospects, as detailed in this exploration map and table:

In Kurdistan, DNO is planning to resume drilling operations to return to pre-Iraq-Türkiye Pipeline shutdown production levels of 100,000 boepd. This comes despite security challenges, including drone strikes in mid-July that damaged surface processing equipment at Peshkabir and a storage tank at Tawke.

DNO also secured important financing arrangements during the quarter, including:

• Issuance of its first USD 400 million hybrid bond in June
• Establishment of a North Sea gas offtake agreement with related USD 500 million financing facility
• Working to establish similar arrangements for North Sea oil production

Detailed Financial Analysis

The company’s cash flow analysis reveals strong operational performance but significant outflows related to the Sval acquisition and debt management:

Q2 2025 operational cash flow reached USD 135 million, up from USD 100 million in Q1. However, the company’s cash position decreased substantially from USD 1,473 million at the end of Q1 to USD 788 million by quarter-end. This reduction was primarily due to:

• USD 294 million in net investing activities, largely for the Sval Energi acquisition
• USD 412 million in net financing outflows, including USD 1,050 million in debt repayment partially offset by USD 700 million in new borrowings and hybrid bond proceeds
• USD 114 million in North Sea tax installments

The balance sheet expanded significantly following the Sval acquisition, with total assets reaching USD 6,261.5 million at the end of Q2, compared to USD 3,707.2 million at the end of Q1:

Net debt stood at USD 860 million at quarter-end, with a net debt to EBITDAX ratio of 0.5x, indicating a manageable leverage position despite the significant acquisition activity.

DNO continues to prioritize shareholder returns, authorizing a dividend payment of NOK 0.375 per share for September 2025, representing a 20% increase from prior quarterly distributions:

Forward-Looking Statements

Looking ahead, DNO expects to benefit from a full quarter of production and earnings contribution from Sval Energi in Q3 2025. The company projects North Sea production of 80,000-85,000 boepd for H2 2025, with a total operational spend of USD 790 million.

Two development projects, Verdande (10.5% interest) and Andvare (32% interest) tieback developments in the Norwegian Sea, are expected to come onstream in H2 2025, adding 7,000 boepd at peak production.

The company’s projected North Sea production shows a strong growth trajectory through 2030, supported by both existing reserves and contingent resources:

In Kurdistan, DNO has resumed near-normal operations at the Tawke field under strict security protocols following the drone strikes. The company remains committed to its strategy of balancing growth investments with increasing shareholder returns.

As CFO Hakon Ensambo noted in the Q1 earnings call, the company expected a net debt to EBITDA ratio of 0.7x following the Sval acquisition. The Q2 results show an even better position at 0.5x, suggesting the integration is proceeding better than initially projected.

DNO’s strategic focus on expanding its North Sea operations while maintaining its Kurdistan assets positions the company for continued growth, despite ongoing geopolitical challenges and the integration complexities of its recent acquisition.

Full presentation:

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.