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Edited Transcript of DNO.OL earnings conference call or presentation 6-Feb-20 9:00am GMT

Full Year 2020 DNO ASA Earnings Presentation

Oslo Feb 14, 2020 (Thomson StreetEvents) -- Edited Transcript of DNO ASA earnings conference call or presentation Thursday, February 6, 2020 at 9:00:00am GMT

TEXT version of Transcript


Corporate Participants


* Bijan Mossavar-Rahmani

DNO ASA - Executive Chairman

* Haakon Sandborg



Conference Call Participants


* Jørgen Torstensen

Fearnley Securities AS, Research Division - Analyst




Bijan Mossavar-Rahmani, DNO ASA - Executive Chairman [1]


Good morning. My name is Bijan Mossavar-Rahmani. I'm the Executive Chairman of DNO ASA, and I welcome you to our 2019 interim results presentation, which covers also the fourth quarter as well as the year-end results for last year.

I am joined here by my colleagues, Bjørn Dale, our Managing Director; and Haakon Sandborg, our Chief Financial Officer. If you're wondering about the cover slide, that is the last year's Stavanger Marathon, sponsored by DNO in which some of our colleagues participated, including Bjørn, who is right there.

Let me start with the operational and financial highlights of last year. We come into 2020 facing significant headwinds in markets. These are geopolitical or global. They're industry-related, market-related, but we come into 2020, I believe, on a strong footing, all things considered. We had a good fourth quarter, I think, relative to our peers and to conditions in markets as well as, I believe, strong enough results for the full year that prove once again our resilience as a company and hopefully, provide us the strength of the balance sheet and the operational position to continue into 2020 with even hopefully better results.

First, 2019 operational highlights. Our operated production averaged 127,000 barrels a day of oil equivalent. This compares to 117,600 barrels of oil equivalent per day in 2018. And of the total number in 2019, of course, a large part of it 124,000 barrels of oil per day was in Kurdistan and our new -- not so new anymore, but certainly for 2019, our new North Sea business unit contributed another 3,000 barrels of oil equivalent per day.

Moving deeper into the numbers. With respect to our company working interest figures, we had a record production of almost 105,000 barrels of oil equivalent per day net to the company, split about 83:17 between Kurdistan and the North Sea. This compares to almost 82,000 barrels of oil equivalent per day in 2018. So we've had a significant bump up over the course of 2019, and these are record volumes of -- for the company in its 48-year history.

We also delivered in 2019 the largest drilling program, annual drilling program in our history, including 36 wells drilled or commenced drilling or spudded across our portfolio, including 24 development and infill wells as well as 12 exploration and appraisal wells, so a very strong drilling program.

In Kurdistan, DNO continues to produce what are among the lowest cost oil barrels in the industry, anywhere, globally, in terms of finding, development and lifting costs. We had, at the end of last year, 106 licenses across our portfolio; 3 in Kurdistan, 87 in Norway, 12 in the United Kingdom, 2 in the Netherlands and 1 in Yemen.

2019 financial highlights. We had net profits of $74 million on record revenues, again, for the company, of close to $1 billion last year at $971 million to be exact. Of that, we had an operational spend of 6 -- just over $600 million in 2019. That includes our CapEx program, our [expense] program and our OpEx activities excluding other G&A and other financing, other expenses. And my colleague, Haakon Sandborg, will go into more detail on the financials in his section.

Of the $606 million, that included, importantly, $345 million spent in Kurdistan and the $261 million spent in the North Sea. This is net of the exploration tax refund where it pertains to our exploration activities in Norway. We spent close to $200 million towards dividend distributions, $47 million for dividend distributions, buybacks of $82 million, buyback of our own shares, and buybacks of bonds originally issued by Faroe Petroleum plc of $65 million. So a total of $200 million was allocated towards these expenditures.

We exited the year with $486 million, close to $500 million, but that number excluded 2 delayed payments for monthly exports from Kurdistan totaling $107 million, but those -- that sum has not been received, that will be recorded in 2020 cash figures. So a strong cash position again as we move forward in 2020.

In addition to the cash on hand, we also had $145 million in marketable securities as of year-end 2019. On a fourth quarter basis, our Q4 2019 operated production was up a bit from the Q3 to 122,800 barrels of oil per day, of which 86,600 barrels of oil per day represented our company working interest production in Kurdistan. That was, again, up just over 2,000 barrels a day from the third quarter. So quarter-on-quarter, we've had improvements in the last 2 quarters of 2019.

That brought our total fourth quarter company working interest production to about 105,500 barrels of oil equivalent per day. So that's both Kurdistan and our North Sea business unit, and again, up from the third quarter. Revenues were also up in the fourth quarter relative to the third quarter, up to $275 million. Our net profit in Q4 was down -- [I'm sorry it] was up to $51 million versus a loss of almost $100 million in Q3 2019. And again, Haakon will shed additional light on that -- on those numbers.

These 2 charts show our historic production and revenue trends and what's of interest is, of course, this represents our move back into the North Sea with the acquisitions of Origo and Faroe. But for those of you who follow the company longer, this is a 20-year history of the company's figures. You'll recall that we -- DNO had a presence in the North Sea in the early 20-plus years ago as well. So the blue being the Middle East, the red being North Sea. We're returning, of course, back to our roots, as we have previously said. On revenues, again, you can see the growth of the company over time. And obviously, with bigger spikes on the revenue side in the last several years. So this is a company that's been around for some time. And clearly, in the last few years has been in a growth mode, both with respect to production and with respect to our revenues, and we're pleased that we're delivering all those goals and ambitions.

Kurdistan, of course, is a very significant part of our overall business. We remain very active in Kurdistan. We describe it as having our foot on the accelerator in Kurdistan, and we remain committed as we have been for some time to continue to outdrill and outproduce all other international oil companies in Kurdistan. Our production is located or is derived from 2 fields in the so-called Tawke license, the Tawke field itself, and the newer discovery, the Peshkabir field. Together in 2019, our operated production levels averaged just under 124,000 barrels of oil per day versus 113,000 barrels of oil a day in 2018. So Tawke license production up about 10,000 barrels a day between 2018 and 2019.

Of that, the Tawke field operating production averaged almost 67,000 barrels of oil a day. And importantly, the wells that were drilled in 2019 contributed 13% of the year-end production figures. So new wells at Tawke field brought in 13% of our production at year-end, whereas at Peshkabir, the newer fields where we're -- our production averaged just over 55,000 barrels of oil a day. The wells drilled in 2019 contributed to 40% of the production at year-end. So that shows the growth at Peshkabir and derived from newer drilling. And of course, these wells at Peshkabir, newer wells, newer field, have larger production rates and make a larger production contribution to our operations at this stage of the field's development versus Tawke, which is the more mature fields, and the newer wells contribute less in terms of both absolute levels of production, but also the contribution to overall field production. So you see that in those trends.

We've talked in the past about our low lifting costs at the Tawke license. That, of course, gives us a significant advantage compared to our peers, not just in Kurdistan, but globally. When oil prices are weak, we can withstand a lot weaker oil prices because our production costs, our lifting costs, are quite small. Again, relative to the global average and many of our competitors in our space. But also these low costs mean that when oil prices are higher, we have a higher cash flow from the operations. And all of this, of course, gives us the resilience and the competitive advantage that I referred to when we talk about in terms of the DNO's operations.

But in addition to our production activities in Kurdistan, we continue to actively explore. Our exploration activities have been focused on the Baeshiqa license, which we've described before as having 2 large structures with multiple target revenues in the Cretaceous, Jurassic and Triassic formations. We've been active in terms of drilling at Baeshiqa now for close to, I think, 2 years or so maybe a bit less. And in November of last year, we announced that in the Baeshiqa-2 well, second of the wells we drilled on the Baeshiqa license, we had flowed the variable rates of both the light oil and sour gas to surface from the upper part of the -- one of the Triassic reservoirs following asset stimulation. This was -- we announced this to the market. We haven't given much more detail other than that because we're still in the process of testing.

We are currently -- we have a rig on location. We are conducting some of the workover operations before resuming our asset stimulation and our testing of the remaining Triassic reservoirs that we haven't had a chance to fully and properly test yet. Once those tests are concluded, of course, we will come back with more detailed and more definitive information. Our goal is to try to understand and assess the commerciality of what we have seen so far, and what we will see as we resume the test programs following the workover and see -- and assess what it is that we have in this well.

We have a third well that a -- planned for drilling in 2020. This is on a separate structure. This is the second of the 2 structures that I referred to. This one is called the Zartik structure, and our well that we're planning to drill this spring is the Zartik-1 well, that will target the Jurassic and Triassic formations on the -- in that area and on that structure. We are now -- we've commenced a site preparation and then we'll be bringing the rig on location in the not-so-distant future, and hope to have the well spud this spring and results later in the year. We remain quite excited about the opportunities to exploring Kurdistan. We've been successful there. It's a very prolific area, and we remain very committed to growing our business in Kurdistan and this is the next step in that effort. And we'll see how successful we are in all this license.

And with all this activity, we continue to reduce our carbon footprint. We announced 2 years ago plans to gather and the pipe of gas that was being produced, co-mingled with the oil at Peshkabir and is being flared as waste gas. We announced plans to move that gas to the Tawke field, which does not have a gas cap or much-associated gas and injected in Tawke to improve recovery of Tawke with the Peshkabir gas.

Of course, the net result of that is that our flare will be reduced and our CO2 production will be reduced. Our emissions are currently around in Kurdistan and our operated fields is right around 7 -- it will be brought down to 7 kilograms per barrel, which compares to the industry average in Norway of about 9 kilograms per barrel and the industry average globally of about 18 kilograms. And so we're going to be hitting several birds of one -- with one stone, importantly, reducing flaring and then moving the gas into Tawke to enhance Tawke recovery. And as a result of all of this, again, reducing our carbon emissions in Kurdistan.

We are on track to build a stronger North Sea platform. The company working interest production in the North Sea in 2019, again, averaged 17,400 barrels of oil equivalent per day. We were recently awarded 10 exploration licenses in the APA round, 5 of those in the North Sea, 2 in the Norwegian Sea and 3 in the Barents Sea. This adds to these 87 licenses already held by DNO in Norway. We have what we believe in terms of placement, geographic placement, a balanced portfolio on the Norwegian Continental shelf. And in terms of our forward activities, Haakon again will address some of those plans, and we'll report to the market on those plans.

We are planning a Capital Markets Day this spring. And so we'll have opportunity to go into more details on our 2020 program and beyond. But I just wanted to flag that the -- we are on track with the cross-border partner alignment. There's a prospect that -- the Edinburgh prospect that crosses the U.K. and the Norwegian border. We've -- again, we've been working hard to -- and Faroe Petroleum before the DNO acquisition, to align the partners on the 2 blocks so that we can drill, and the preparations are underway to drill this prospect in early 2021. That is a, we believe, a high impact. Still an exploration prospect, but a high-impact one, and we're quite excited about that. That's probably the highest impact exploration prospect in our North Sea portfolio at this time.

Again, our business in the North Sea continues to grow. We are now at fifth place in total Norwegian licenses held, 97 post the upper round, of which 24 are operated. So we're gearing up more and more our operational capabilities in the North Sea. We believe this portfolio gives us a solid platform for additional growth and including transactions, including acquisition of production, producing assets within those transactions in both the U.K. and in Norway. And we've given our greater financial and organizational capacity as DNO. We expect to take larger stakes and licenses and ramp up operated projects, so there will be increased materiality when we are successful.

Also our North Sea presence opens up new financing opportunities for us and lowers our weighted average cost of capital is one of the reasons, of course, we gave for our move back into the North Sea. And we're seeing that now coming through.

We've been returning cash to shareholders. We've -- in our dividends distribution program that was started in August of 2018. Under that program, we made 3 distributions so far, totaling NOK 620 million or just over $70 million. The next semi-annual distribution of NOK 0.2 per share is expected to be made in March of 2020, so sometime next month. Last month, in January 2020, we completed our -- a shareholder authorized share buyback program of up to 20% -- of up to 10%. We completed our program, acquired 10% of our own shares of just around 108 million shares plus, which were acquired at a weighted average price of NOK 10.61. And those of you who follow our announcements and releases will have seen earlier this week that the Board of Directors of the company has called for an Extraordinary General Meeting to be held on the 28th of February to seek shareholder approval to cancel all of these treasury shares. So that's a second way of returning cash to our shareholders, the dividend program and the share buyback and share cancellation.

We've also been busy buying back bonds. These are principally bonds issued by Faroe Petroleum prior to our acquisition. Our stronger balance sheet allows us to do that as well as, again, sustain these returns to shareholders. We've, to date, bought back almost $70 million in nominal value of the Faroe bonds purchased at an average price of $107.39, and we now have about $16.2 million in nominal value of Faroe bonds that are still outstanding.

We've also -- with all these buybacks, and bonds, and shares, dividends, we've -- notwithstanding the fact that we have a strong cash position, we have secured additional financing to support and sustain our growth, in particular, in the North Sea. And these were previously announced, but I'll just quickly summarize them.

We've put into place and extended our reserve-based lending facility and our Norwegian exploration financing facilities. The RBL increased to of $350 million with an accordion of $350 million covering the North Sea assets and a maturity date of 2026. So this gives us some time to draw on this facility. Our exploration financing facility here in Norway was increased recently by NOK 300 million to NOK 1 billion, with an accordion of NOK 500 million and a year-end 2023 maturity. So we feel that we have again reloaded, in a sense, our -- and have the financing, additional financing firepower, with which to pursue and grow our North Sea ambitions.

With that, I'll turn it over to Haakon for a more detailed discussion on the financial portion.


Haakon Sandborg, DNO ASA - CFO [2]


Okay. Good. Good morning, everyone. Maybe I'll try to summarize our 2019 financial review. I must say that we are, of course, pleased to again achieve significant growth in both production and revenues from our Kurdistan operations, but also clearly pleased to add important new production from our production and revenues from our new North Sea platform last year.

So we continue to grow and diversify also this part of our business. You will have seen maybe from our financials that we had some cleanup of North Sea asset values that was required, and that requires substantial impairments. And that had a negative effect on the consolidated financial results for the second half of last year. But as you have seen, backed by our strong operations and cash flow, we still enjoy the very busy year in the capital markets. We had several bond transactions, share buybacks, and dividend payments. And we also then, as you see in a -- reentered the banking market through both RBL, but also other bank facilities last year. So let's now look at what these developments brought for our key financials.

If we -- here maybe start with a bit of a longer-term perspective. Our revenues dipped significantly in 2015 to 2016. And that was, of course, due to the oil market downturn that started in late 2014. But our revenue recovery from 2017 onwards, has thereby been -- has thereafter been driven by several factors. And they include increase in production. We have a [step-up --] increased interest of 75% in the main Tawke PSC. We have seen the payment regularity in Kurdistan, generally higher oil prices and, of course, also adding is the new and North Sea operations from last year.

Well, I should also say that our reported revenue in 2018 included a one-off revenue recognition effect of $183 million. And the net of that accounting effect, we saw a remarkable $325 million revenue increase in 2019, and that's up 50% from 2018. So the main reason for this significant increase include a $107 million production volume effect in Kurdistan and also $254 million from North Sea revenues as well as a blend of several other factors.

But let me state the obvious, please notice a major step up, an increase in our operational revenues last year. On the cost side, our cost of goods sold are up by $191 million in 2019 primarily due to increase in lifting costs and tariffs from -- of $146 million mainly from our North Sea operations. And then we also had higher depreciation last year, again, from production in the North Sea. Actually, we had a higher NCS exploration activity that led to an increase of $82 million in expensed revenue last year -- expense exploration last year. But we should also keep in mind that much of these Norwegian exploration expenditures show up again as tax income in our P&L statement.

So with a combination of higher revenues, increased lifting and exploration costs, but also adding back depreciation and tax income, our 2019 netback cash flow increased by $117 million last year to a solid level of $606 million. But as you can see on this slide, we thereby continue a good trend, a strong growth in cash flow from 2017 and onwards, seen by our netback.

Now I could say that the operating profit, on the other hand, is showing a bit of a different development on this slide. And that is basically because of some major one-off additions to operating profit in 2017, noted on this slide, through the important receivables settlement agreement that we reached with the KRG in that year, and also in 2018 through the revenue recognition effect that I mentioned.

Had we netted out those one-offs, the operating profit obviously would have shown a better development than what you're seeing here. But there is, however, to be frank, still a drop in operating profit in 2019. That comes from the expense exploration that I mentioned and also from the impairments last year. I will revert to this shortly.

Fine. So let's look now at both the Q4 and the full year results in more detail in our P&L statement. You will note that Q4 revenues are up significantly by $48 million from Q3. And that is a combination of Kurdistan revenues increasing by $26 million, mainly from the volume effect, more production, while also North Sea revenues was up by $22 million in Q4. That's due to basically a higher production and also higher lifting. We see that our Q4 cost of goods sold are fairly stable from Q3. The increase that you see on the screen here, on the slide, is in higher depreciation from the higher production. And Q4 exploration costs are reflecting that we have expensed the 3 North Sea exploration wells in this quarter, and that includes the DNO operated the Canela well. We recognized also $23.7 million of impairments in Q4. And that's part of the annual impairment testing of our technical goodwill. And the main item that I can explain here was the impairment of the Ringhorne East field that was triggered by updated cost and production profiles in the Norwegian revised national budget for 2020.

So all in, that gives us Q4 operating profit of $44.4 million. You will see that net finance is reduced in this quarter, net finance cost. That's mainly due to unrealized FX gains of $16 million. And also see that our tax income is lower this time due to lower exploration tax refunds in Norway. But it's worth seeing that the tax income still increases our Q4 net income to $50.9 million. For the full year figures on the right of this slide, you will see that there is the increase in revenue and cost of goods sold that I already have discussed. And you see the exploration cost of $146.4 million that are, as I mentioned, up by $82 million from 2018.

Again, primarily due to higher activity following the acquisition of Faroe Petroleum. The high impairments last year of $162 million were recognized mostly against the North Sea assets, including the Brasse field and Schooner and Ketch. And as mentioned, Ringhorne East. But with a substantial tax income of $121.3 million from the exploration tax refunds, we still show a net income of $73.5 million for the full year.

As we discussed in our several presentations last year, quarterly presentations, we increased our operational spend significantly in 2019 to a much higher level of $606 million last year, net of exploration tax refunds. As you see in these numbers, the operational spend was split between Kurdistan with 57% and the North Sea with 43%. And the increase from 2018 that you see here was due to high drilling and development activity in Kurdistan and also due to, of course, again, the new North Sea operations. But it's a small comment, but the actual operational spend of $606 million was a bit under the revised guided level last year of $620 million for the full year, basically, a bit lower on both CapEx and lifting cost than what we had in our revised guided level.

But the main point is that the actual 2019 CapEx actually still increased by $339 million. That's up $209 million from 2018. And it should be noted here that the acquisition cost for Faroe Petroleum are not included in this much higher CapEx numbers. I'd just like to note that as before, our Kurdistan lifting costs remain low and stable at $3.30 per barrel, while our North Sea lifting costs are now at the level of -- for the last year for a level of $17.7 per barrel.

If I move now to cash flow. And as I'd like to say, this is the key part of our finance presentation. And as you have seen here today, 2019 was clearly a year of major investments for us in DNO. We bought the remaining 70.1% of the shares in Faroe Petroleum for $429 million net of cash in this company. But also including other investments of $394 million across our portfolio. Total investments reached a high level of $823 million last year.

To finance these high investments, we started the year with a good cash balance opening of $729 million and we added the $385 million from our solid operational cash flow. In addition, we raised $195 million from financing, as you can see here, and that's the net proceeds from our new bond facility raised in Q2 last year. But also of course, the combination of buyback of bonds, buyback of owned shares, dividend payments and other items. So in total, we used $243 million of our cash balances to complete the investment funding last year. But as you can see here, the cash position still remained robust at $486 million.

As Bijan mentioned for the cash flow in Q4, there was a delay in payments from the KRG for 2 months of export deliveries from the Tawke PSC. This delay increased receivables in our working capital by $107 million in the quarter, which then combined to reduce the operational cash flow from a much higher level, it would have been if we had been paid for these 2 months also. But since we now have received these payments with a bit of a lag from the KRG, we will then see that reflected in higher cash flow in the first quarter this year.

Here's our -- look at our balance sheet values, if you want. And naturally, with the acquisition of Faroe Petroleum, the asset value, so therefore, the size of the balance sheet has increased significantly. This is the main reason for the drop in the equity ratio to 36% if you can see to the right on this slide. But I would say that with our substantial cash balances, we still have a conservative net interest-bearing debt level of $576 million, especially if you see that level in relation to our now much larger balance sheet and our solid cash flow. You will note some movement here on the financial assets, and what we show here at year-end 2018 included our then 29.9% shareholding in Faroe. That's now subsequently consolidated into DNO through the acquisition. So that's the main reason [Faroe] was going down.

And then at the year-end 2019, the financial assets are basically, our treasury shares and the shareholding in RAK Petroleum. And as we now have stated, we are seeking shareholder approval to cancel this holding of treasury shares obviously for the benefit of our shareholders. But again, to be noted here, we continue to hold a very solid financial position supported by a strong production and also by free cash flow in Kurdistan. And I'd like to say that our asset portfolio is now also clearly fairly better balanced through the substantial North Sea operations.

Okay. So to finish up with a look at our projected operational spend for 2020. We have planned CapEx of $320 million this year and a split between $200 million for Kurdistan and $120 million for the North Sea.

Kurdistan CapEx is again focused on the drilling of several production wells across the Tawke and Peshkabir fields, and that's aimed at sustaining high-production levels from our Tawke PSC. We are also completing the important gas reinjection project that you have heard about today, eliminate flaring in Peshkabir and also to enhance production at the Tawke field.

And otherwise, we will carry out significant facility investments and development, especially at Peshkabir. Just like to note, as we've done before, that this investment program is supported by a quick recovery of the Kurdistan spend as costs were under our Tawke PSC in Kurdistan. For the North Sea, the CapEx that we note here will be used mainly for our share of production drilling and development and other projects at the innovation fields that are mentioned here, Fenja, Ula, Tambar and Brage fields on the NCS.

Our strategy calls for being active in exploration, and we will continue to be that also this year. We plan to drill up to a total of 10 exploration and appraisal wells this year across our portfolio. So for Kurdistan, on the exploration side, we will continue, of course, to test the Baeshiqa-2 well. And as noted also drill an exploration well on the separate Zartik structure in the Baeshiqa license.

For the North Sea, we will drill up to 8 exploration and appraisal wells in 2020. It should be noted that some of these wells in that number are still pending final approval. So that's sort of why we're saying up to. But to note, some of these wells, one of them would be in the Barents Sea. But other than that one, the other wells, are in that prospectivity in areas where there is existing infrastructure.

So I'll just mention some of the projects we're involved in. We expect that the North Sea wells this year will also include 1 appraisal well on the Iris/Hades discovery in the Asgard area. We're looking at participating in 2 wells in the Gjøa and Vega area. On the program on the horizon is 1 well in the (inaudible) license and also 1 exploration well in the Ula area. And all these are well-known in CNS core areas for DNO.

Now net of the exploration tax refunds, the North Sea exploration expenditures on a net basis, are estimated to range up to $40 million, but that depends on how many wells we actually will drill or participate in. Okay. We've been going on for a while. But in sum, we look forward to another busy year, a year with high activity and also we think high opportunity. And I think we will call it the end of our presentation now and open up for questions. Thank you.


Questions and Answers


Bijan Mossavar-Rahmani, DNO ASA - Executive Chairman [1]


No questions from the web? No questions from the floor? I don't know how to take that, but I want questions from the floor.


Jørgen Torstensen, Fearnley Securities AS, Research Division - Analyst [2]


Jørgen Torstensen with Fearnley Securities. Just a question on the flow of cash from Kurdistan. Do you see any reason why we would sort of expect further delays or what's your take on that?


Bijan Mossavar-Rahmani, DNO ASA - Executive Chairman [3]


We have no reasons to expect further delays. The delays that occurred were explained to the company and the company has explained these to the market and they make sense. And there was a commitment that as some of the issues that had led to delays will be resolved, the payments would resume, and we would be able to catch up on that same place. So I don't foresee any issues. Things happen all the time. There may be challenges again, but -- and we're prepared for those challenges. But we have no reason to believe that there'll be -- there are no planned delays. Delays can take place. They do all sorts of issues. Some of our more important challenges right now are issues related to travel, coming from the coronavirus issue. We have a lot of people rotate in and out of Kurdistan and our operations in some other parts of the world. And those -- so those sort of challenges are more tangible right now, and we'll address those as they come up.

With respect to delays, if delays occur, we are, again, resilient. We have a strong cash position, we can deal with those. So that, in terms of the list of challenges we're facing in 2020, I think, comes much, much lower on our list. We've experienced them before under much more difficult geopolitical circumstances, market circumstances. We managed a deal with those and came out stronger. Haakon made the reference to our picking up another 20% of the Tawke license that's been very important to us, and that's been a driver of our better performance in terms of production, in terms of revenues. So there are other challenges, I think, face the industry, not just us that we have to be mindful of and address. And I think we're well positioned to do that.

I want to repeat, as we have done before, that the partnership between DNO and Kurdistan, which predates my involvement with the company has been a strong one. It's been a mutually beneficial one. A lot of respect on both sides. We have issues and the government is supportive of us but we need to help. And there are times when they face challenges, market earlier or otherwise, and we are understanding and helpful. It's been a terrific, terrific partnership. Again, it's been a win-win over the course of the engagement. And we have no reason to believe that that will change for any reason.

There's a question up there.


Unidentified Shareholder, [4]


My name is Domingo (inaudible) I'm independent, just a small shareholder. But I have a question for the Chairman and the management, where you guys have any strategy and an execution plan and so forth. And also that the market is saying something that maybe it is what you're expecting, maybe not. But for some of the shareholders, minority shareholders, but there is a little bit of a disconnect. Is there anything that you guys have different in 2020? Or is it going to -- just any plans to have a different approach? Apart from what we've seen already that is quite very well laid out.


Bijan Mossavar-Rahmani, DNO ASA - Executive Chairman [5]


I think we've laid out the company's spending and investment opportunities and the targets reasonably well. Certainly, for the start of the year, this is just -- we're just into the first week of February. As I mentioned, there'll be an opportunity in our Capital Markets Day in the spring to go into more details with respect to specific area, specific prospect, specific wells and so on. So we will have opportunity to share more about that.

If you're asking, are there other kinds of transactions or other kinds of growth opportunities that we're looking at, none that we are in a position to talk about today because we're always looking for opportunities. And as those have become more real, obviously, we come back to the market and the news flow catches up pretty quickly. But as of now, I can't think of anything that we have in mind that is far along enough that we would want to talk about or even act on. Does that answer your question? I don't know whether there's something else you have in mind that you're approaching in directly.


Unidentified Shareholder, [6]


Sure. [I don't have a] specific question because obviously, some minority shareholder, they don't participate on the (inaudible) and operations (inaudible). So I think you're telling me (inaudible) feedback on to something. Am I correct? The current performance of when the market perceives the value of the company.


Bijan Mossavar-Rahmani, DNO ASA - Executive Chairman [7]


First, we don't distinguish between small shareholders or large shareholders in this respect. Our door is always open to any and all shareholders, and we hear from -- I personally directly hear from many of our shareholders, sometimes great ideas and terrific insights. So we welcome the interaction with shareholders. So if you have any thoughts, we obviously want to hear from you and from others. So the door is open in that sense.

Do we have some secret recipe? I know our share price, as a shareholder myself, a representative of a shareholder group, we're not happy with the performance of our share price of the market, that's not unique to us. The industry everywhere has been impacted by this. Much of it has to do with the climate, politics and other factors. So it's not been fun to be in the oil and gas business in the last 18 months, perhaps, longer. And clearly, what's happening to the price of oil is not helping, and that's outside of our control as companies. We take prices, we don't make prices.

But what we can do is try to be more efficient to keep costs under control, to be very opportunistic. Opportunity comes up to act on it. We have, basically, a fairly flat organizational structure, management structure. We have a very active and supporting but challenging Board of Directors. So the Board, the management and the teams, we all sort of work as one machine, and this allows us to act on opportunities or respond to challenges as they pop up.

So we're not bureaucratically sort of burdened. And there are no agendas in the company other than increasing value for shareholders. So I think we're positioned to act on opportunities as they come up. We've also a balance sheet that supports that, but we are in a situation where the industry overall is being hammered by prices and by climate, politics and by factors that are outside of the scope of what we can act on. There are things we can do to maneuver and address some of the market and shareholder challenges. But we're a survivor. We've had companies that -- when I first became Chairman of DNO and the market cap 10x ours, they're now market cap half of ours.

So I mean there've been -- a lot of companies have disappeared. We're still here. And there was a commercial in the U.S., I think it's still off for one of the battery companies and they have this rabbit that's always drumming or running on these batteries. And we're sort of -- I started to feel like we were like that -- I don't know what the name of it was, something rabbit.


Unidentified Participant, [8]


Energizer Bunny.


Bijan Mossavar-Rahmani, DNO ASA - Executive Chairman [9]


Energizer Bunny. And I feel like we're the Energizer Bunny, you know. You throw everything at us and we're still going. And but again, if you have thoughts or any -- the door is always open to ideas and how we can improve and how we can address the questions and then the -- any concerns that our shareholders have, large and small.

That's all, my Energizer Bunny colleagues, we can now get back to work. Thank you all very much for joining us for this presentation. Thank you.