Pay­ments to DNO help RAK Petroleum trim losses

Oslo-listed com­pany re­ports $6.9m loss, but bet­ter than 2015

The National - News - Business - - The region - An­thony McAu­ley am­[email protected]­

RAK Petroleum said it nar­rowed its loss sharply last year, helped by reg­u­lar pay­ments from the Kur­dis­tan Re­gional Gov­ern­ment (KRG) of Iraq to its main hold­ing, DNO, which op­er­ates the Tawke oil­field there.

The com­pany, which has a list­ing on the Oslo bourse, owns a stake of just more than 40 per cent in DNO, which is also listed in Oslo, and a one-third stake in Fox­trot In­ter­na­tional, a pri­vately held com­pany that pro­duces about 75 per cent of the Ivory Coast’s gas needs from off­shore gas­fields it op­er­ates in the Gulf of Guinea.

RAK Petroleum’s net loss last year was US$6.9 mil­lion, down from a loss the pre­vi­ous year of $75.5m, with bet­ter fi­nan­cial re­sults from DNO (which had a $6.1m op­er­at­ing profit ver­sus a $174m loss the year be­fore) bol­stered by steady in­come from its much smaller hold­ing in the Fox­trot as­set. DNO has suf­fered to­gether with other op­er­a­tors in Iraq’s Kur­dish re­gion from a lack of pay­ment by the KRG, which has been faced with se­vere fi­nan­cial strain be­cause of its con­tin­u­ing bat­tle with mil­i­tants in the west, as well as un­re­solved dis­putes with the cen­tral gov­ern­ment in Bagh­dad. How­ever, DNO re­ceived 10 pay­ments last year from the KRG, which have helped eat in to the $1 bil­lion of ar­rears that had built up by the end of 2015. DNO rev­enues were up 8 per cent last year at $202m, de­spite lower pro­duc­tion and av­er­age oil prices.

RAK Petroleum’s an­nual re­port said the KRG pay­ments to DNO have con­tin­ued into this year and DNO is re­sum­ing in­vest­ment with the drilling of four new wells, which it ex­pects will re­verse a 22 per cent de­cline in pro­duc­tion from Tawke last year, to 112,600 bar­rels of oil equiv­a­lent per day on av­er­age in 2016.

Fox­trot In­ter­na­tional’s profit in­creased to $52m last year from $30m in 2015, with RAK Petroleum’s share dou­bled to $16m.

The com­pany said that it rein­vested about half its profit from Fox­trot last year to meet de­vel­op­ment obli­ga­tions but that the profit from this as­set might be avail­able in fu­ture for in­vest­ment in other projects, to pay down debt or for div­i­dends.

RAK Petroleum’s thinly traded shares in Oslo closed down 1.2 per cent at 7.65 Nor­we­gian krone yes­ter­day.

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