Watchlist Update: DNO (DNO.OL)
Talks near resolution – but IOCs hold the final lever
In our previous update two days ago, we covered how high-level meetings between Erbil and Baghdad had resumed with increased intensity, sparking cautious optimism that a deal to restart Kurdistan’s oil exports might finally materialise. Since then, things have moved even faster – and the shape of a final agreement is beginning to emerge.
A breakthrough within reach?
According to multiple reports (Rudaw, Kurdistan24, Baghdad Today), the two sides have now reached preliminary agreement on oil volumes, domestic revenue sharing, and the structure of future payments. The KRG has accepted to deliver 300,000 barrels per day to Iraq’s SOMO (280k for export, 20k for local refining), and to remit 50% of monthly domestic revenues (around 100–130 billion IQD) in exchange for direct federal salary payments.
The breakthrough may also include a key demand from international oil companies (IOCs): Baghdad has reportedly agreed to cover $1.2 billion in unpaid dues, owed to producers including DNO for oil delivered from October 2022 until the March 2023 export shutdown.
This is highly material for DNO, which has previously disclosed $296.5 million in receivables. That equates to roughly 3 NOK per share, or about 24% of the company’s current share price (12.86 NOK). Unlocking this sum could meaningfully alter both DNO’s balance sheet and its near-term dividend outlook.
Not just oil – geopolitics in play
The latest developments aren’t happening in isolation. According to regional sources, U.S. diplomats are actively mediating the talks between Erbil and Baghdad – pushing for a deal that stabilises the Kurdistan Region while limiting Iran-backed militia influence in the rest of Iraq. As part of this strategy, Washington is advocating for:
A partial export restart using the KRG pipeline
A British company (Wood Mackenzie) to audit oil production costs over a 90-day period
A structured path to depoliticise revenue flows and budget transfers
Meanwhile, the U.S. is withholding militia salaries and applying pressure through control of Iraq’s dollar reserves held at the U.S. Federal Reserve – giving this push both economic and political leverage.
Still some hurdles
Despite the progress, a few sticking points remain:
The timing of the 90-day audit: KRG wants the clock to start at signing, while Baghdad prefers to wait until the auditor begins work.
IOCs are holding firm: APIKUR members – including DNO – insist on three things before restarting exports:
No changes to existing contracts
A binding plan to settle the receivables
Clarity on future field development terms
Companies have reportedly agreed to accept the $16 per barrel cost recovery rate for two months – but only with guarantees that their broader terms will be respected.
A meeting between KRG officials and IOC representatives is planned following the return of the KRG delegation from Baghdad. Final approval may come from Iraq’s Council of Ministers – possibly within days – if these conditions are met.
Bottom line:
Momentum continues to build, but DNO investors should remain grounded. While the macro deal appears to be within reach, IOC sign-off is the final piece – and it’s not a given. If it comes, however, the combined impact of resumed exports, unlocked receivables, and a clarified commercial framework could catalyse a major re-rating for DNO – and potentially set the stage for industry consolidation, as larger players eye strategic entry points into a now more investable Kurdistan region.
Want to follow every twist and turn?
Join the discussion in the DNO channel on our Discord server – we’re tracking the developments in real time.
Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice. Always conduct your own research or consult a financial advisor before making investment decisions. The author may hold positions in the mentioned securities.