DNO jumps on Iraq export deal

Shares in DNO International (DNO.OL) jump 18.5 percent after the company says it has received formal approval from the Kurdish regional government in northern Iraq to start exporting oil from its Tawke field.

Iraqi Oil Ministry spokesman Asim Jihad also said on Sunday that the ministry will begin exporting oil from fields in semi-autonomous Kurdistan.

“This is a big break-through,” analyst Trond Omdal at Arctic Securities says.

Omdal says he increased his net asset value estimate for DNO by more than 40 percent, partly due to a bigger probability of success for DNO’s Iraq operations.

London-listed shares in Canada’s Addax Petroleum (AXC.L) rise 4.5 percent after it also received approval to export from its Taq Taq field.

“DNO and Addax are the first listed companies to get production there,” Omdal says, adding the firms could be takeover targets for international oil companies trying to get a foothold in Iraq.
DNO has been exploring the areas under a 2004 deal signed with the Kurdish provincial government of northern Iraq.

The project angered many Sunni Muslims in Iraq because they see it as part of an effort by Kurdish areas to secede from Iraq.

DNO said preliminary studies of the first Tawke field well indicated five reservoir levels of oil.

“Based on the results to date and contingent on successful outcome of the well tests, the first test production of oil from the Tawke Area could commence in the first quarter 2007,” the company said.

DNO said it plans further tests of the well to determine production capacity, and plans two more wells to help assess the size of the find.

Iraqi officials have said the field near Zakho, 250 miles northeast of Baghdad, could have about 100 million barrels of oil reserves.

DNO, founded in 1971, is also exploring for oil in Norway, Yemen, Mozambique and Equatorial Guinea.