DNO ASA, the Norwegian oil and gas operator focussed on the Middle East and the North Sea, has entered into a USD 117.25 million transaction agreement in accord to which RAK Petroleum will transfer its ownership of Mondoil Enterprises to DNO. The all-share transaction encompasses Mondoil Enterprises LLCs 33.33% indirect interest in privately held Foxtrot International LDC whose principal assets are operated stakes in offshore production of gas and associated liquids in Cote d’Ivoire (also known as Ivory Coast), forming a foothold for DNO in West Africa.
Bjorn Dale, President/Managing Director at DNO ASA said that as DNO targets expansion beyond the Kurdistan region of Iraq and the North Sea, the move into Cote d’Ivoire is a significant initial step into an extremely prospective region offering a comprehensive set of growth opportunities through acquisition of producing fields, development assets and exploration licenses. The firm is now evaluating additional opportunities in the region, Dale added.
In early 2020, the Block CI-27 joint venture embarked on a two-year, USD 350 million field development and onshore facilities construction project to supply gas to two new power stations in relation to the signature of amendments and extension of the production sharing contract and the gas sales contract to 2034.
DNO funding from cash flow
Capital investments have been funded by cash flow from operations. This work is nearing completion following the drilling of three new and two side-track wells – the last well in the programme, a side-track, is currently making progress.
This additional processing and well capacity are slated to increase gas supply to over 230 million cubic feet each day, subject to well performance and electricity sector demand. Over the period of the expansion, the drilling of another two wells is premeditated to preserve the higher production capacity of the license. In the first half of 2022, gross sales averaged two hundred million cubic feet of gas and 1,500 barrels of oil and condensate in a single day. Oil and condensate (and limited quantities of gas) are vended to the local refinery at inaccessible prices.
Due completion of the transaction is conditional on approval by the shareholder at an extraordinary general meeting of DNO resolving to issue the consideration shares. The formal notice of the general meeting of DNO to be held on September 13, 2022, is attached, and delivers further information on the proceedings as well as a description of the terms and conditions of the transaction agreement.
RAK Petroleum will also hold an extraordinary general meeting to pursue shareholder approval of the capital repayment plan.