DNO Quarterly Net Falls 89% After One-Time Gain a Year Earlier

By Maren Naess Olsen

Aug. 20 (Bloomberg) -- DNO International ASA, the Norwegian oil producer operating in northern Iraq, said second-quarter profit fell 89 percent after a one-time gain boosted earnings a year earlier.

Net income dropped to 13.6 million kroner ($2.53 million), or 0.02 krone a share, from 122.5 million kroner, or 0.14 krone, a year earlier, the Oslo-based company said today in a statement distributed by Hugin. That missed the 35 million-kroner median estimate of analysts surveyed by Bloomberg News.

DNO, the first foreign company to pump oil in Iraq since the industry was nationalized in 1972, is supplying the northern Kurdistan region while it awaits approval to export crude. The company booked a 98 million-krone gain from the sale of North Sea licenses to Bayerngas Norge AS in the second quarter of last year.

DNO and other oil producers have benefited from rising prices for crude, which traded 90 percent higher in the second quarter than a year earlier and climbed above $140 a barrel for the first time in June. DNO's sales advanced 30 percent to 412.5 million kroner in the period, exceeding an analyst estimate of 411 million kroner.

The company started drilling in northern Iraq in November 2005 and has signed production-sharing agreements with Kurdistan's regional government. Iraq, with an estimated 115 billion barrels of proven oil reserves, holds the world's third- largest crude resources behind Saudi Arabia and Iran, according to BP Plc figures. DNO also operates in Yemen.

To contact the reporter on this story: Maren Naess Olsen in London at molsen10@bloomberg.net