DNO's Dual Engines: Kurdistan Rebound and North Sea Growth Fuel Q4 Surge

OSLO, NORWAY – January 19, 2026 – Norwegian oil and gas operator DNO ASA has signaled a powerful end to 2025, revealing a significant production rebound in the Kurdistan region of Iraq and continued strategic expansion in the North Sea. In a preliminary trading update released today, the company painted a picture of operational resilience and growth, setting a positive stage for its full financial results scheduled for early February.

The update showcases a dramatic recovery in its Middle Eastern operations and highlights a carefully managed portfolio that leverages both company-operated assets and lucrative non-operated stakes in Europe. This dual-engine approach appears to be successfully navigating geopolitical complexities while funding exploration and shareholder returns.

Kurdistan's Pragmatic Comeback

The most striking figure from the Q4 update is the resurgence of DNO's Kurdistan operations. Gross operated production from the region surged to 77,268 barrels of oil equivalent per day (boepd), a nearly 66% increase from the 46,572 boepd reported in the third quarter of 2025. This rebound brings production levels back in line with figures from a year prior, marking a significant operational turnaround.

This recovery is not tied to the reopening of the long-shuttered Iraq-Turkey Pipeline (ITP), but rather to a pragmatic and ongoing sales strategy. Throughout the quarter, DNO sold its share of oil from the prolific Tawke license directly to local buyers. Crucially, the company confirmed that all payments were received in advance of deliveries, a move that insulates it from the payment uncertainties that have historically plagued international oil companies in the region.

This cash-and-carry approach has become a vital lifeline since the ITP ceased operations in March 2023 following an arbitration ruling. While discussions to resume exports have been ongoing, DNO has prioritized the certainty of immediate cash flow over the potentially higher, but less reliable, revenues from pipeline exports. This strategy, while likely involving sales at a discount to international benchmark prices, has proven effective in maintaining production and generating stable income. The company has even signaled confidence in the arrangement, announcing plans late last year to restart drilling to boost output further, contingent on the stability of these local offtake routes.

Deconstructing the North Sea Powerhouse

While Kurdistan's recovery provided a major boost, DNO's North Sea assets delivered impressive growth, solidifying the region as a cornerstone of the company's portfolio. The trading update revealed a significant year-on-year expansion, with net entitlement production climbing to 88,271 boepd. This is a substantial increase from 77,324 boepd in the previous quarter and a massive leap from the 19,031 boepd reported in the fourth quarter of 2024.

This figure may seem puzzling when contrasted with the much lower gross operated production of 10,555 boepd in the North Sea. The vast difference underscores a key element of DNO's strategy: acquiring significant non-operated equity stakes in large, producing fields managed by other companies. While its own operated assets contribute a smaller portion, DNO's entitlement from its portfolio of partnerships provides the lion's share of its North Sea output.

This strategy allows the company to gain exposure to high-volume, low-risk production from established fields without bearing the full operational and capital burden of being the lead operator. Recent acquisitions, including interests in the Arran field in the UK and assets in the Norne area offshore Norway, have been instrumental in driving this net entitlement growth, transforming the North Sea into a major revenue and production engine for the company.

Mixed Fortunes in North Sea Exploration

Alongside its production success, DNO's update provided a transparent look at its ongoing exploration program on the Norwegian Continental Shelf, which yielded mixed but strategically valuable results. The company participated in three exploration wells during the quarter, with two discoveries and one dry hole.

The successful wells, Tyrihans Øst (DNO 30% interest) and Camilla Nord (DNO 5.5% interest), are both considered commercially promising. Tyrihans Øst is estimated to hold between 1 and 8 million barrels of oil equivalent (MMboe), while Camilla Nord is estimated at 2.2 to 4.7 MMboe. While not large-scale discoveries, their strategic value lies in their proximity to existing infrastructure. Both are being assessed as potential low-cost, high-return tie-back candidates to nearby production facilities, a common and effective strategy for monetizing smaller finds in a mature basin like the North Sea.

The quarter's disappointment was the Page well, in which DNO held a 50 percent operated interest. It was classified as dry, failing to find oil in its target reservoir. However, this setback is softened by previous success in the same license, PL1086. In 2024, DNO announced the play-opening Othello discovery in that license, a more significant find that de-risked the area. The mixed results of Q4 therefore reflect the inherent risks of exploration, while the two new discoveries affirm the company's ability to continue adding valuable, easily commercialized reserves to its portfolio.

Financial Health and Shareholder Commitment

The strong operational performance appears to be underpinned by a healthy financial position. DNO announced it paid a quarterly dividend of NOK 0.375 per share, amounting to a total distribution of USD 35.8 million to shareholders. This continues the company's policy of consistent shareholder returns.

Furthermore, the firm made substantial tax payments in Norway totaling USD 96.5 million, covering installments for 2025 and final assessments for 2024. The ability to meet these significant obligations to both investors and the Norwegian state simultaneously points to robust cash flow and profitability during the period.

As the company prepares to release its full, audited financial results on February 5, this preliminary operational update suggests a company firing on both of its main cylinders. Investors and market analysts will be watching closely to see how the impressive production volumes from its dual-engine strategy in Kurdistan and the North Sea have translated to the bottom line.