Oslo-based oil and gas firm DNO, known for operating in high-risk areas of the Middle East and North Africa, was the first foreign company to start drilling for oil in Iraq after the US-led invasion ended in 2003. A decade later, it’s caught in concerns over the latest invasion of Iraq this summer by the extremist group now known as the Islamic State (IS), which poses a threat to DNO’s employees and its oil fields in the Kurdistan region.
As the IS continued its murderous sweep through Iraq and turned north towards the Kurdish areas, DNO’s stock plummeted, falling more than 9 percent in just one day last week after news broke that IS had seized more power from Kurdish forces. Several cities fell and thousands of refugees continue to suffer under horrific conditions in the mountains and deserts, lacking both food and water. The fighting was getting closer to areas where DNO has three facilities north and east of the now-IS-controlled city of Mosul, with the three reportedly accounting for nearly 80 percent of the company’s production. IS already has taken over oil and gas production elsewhere in Iraq.
In Oslo, frightened relatives of local residents under threat by IS have been in anguish and took part in a march through the city’s streets late last week in an effort to drum up support for Iraq and the Kurdish areas. Officials at DNO have also been following the drama closely, with newspaper Dagens Næringsliv (DN) reporting that the company claimed production was continuing within its “established” security framework. “As in all countries where we operate, the security of our employees is the first priority,” Bjørn Dale, chief executive of DNO, said last Monday.
DNO spokesman Henrik Schwabe told DN later last week that Dale’s claim still applied, and on Friday, the US started bombing IS militia, fearing genocide and that oil and gas interests were threatened as well. DNO’s shares rebounded on the Oslo Stock Exchange and were recouping more of their losses on Monday, but still remained around 12 percent lower than they were a week ago.
“It’s clearly positive that the US is now giving air support to both Kurdistan and central Iraqi authorities in the fight against IS,” analyst Øyvind Hagen of ABG Sundal Collier told financial news service TDN Finans. Hagen said US President Barack Obama’s statements and use of force had shifted the power balance in favour of Kurdish and Iraqi forces.
It remained unclear, though, whether it would be enough to halt IS’ offensive. “This is a conflict that can change all the time,” analyst Christian Yggeseth of Arctic Securities in Oslo, who follows DNO, told DN. “DNO’s shares will remain volatile as long as it continues.”
It’s not the first time DNO, formerly known as DNO International, has been caught in dangerous situations. In January, for example, two soldiers were killed and another injured in a terrorist attack on a DNO operation in southeast Yemen. Dale claimed the attack wasn’t directed at DNO but at a control post nearby, while news bureau AFP reported that the group behind the attack wanted DNO out of the country. DNO launched operations in Yemen at the end of the 1990s and had five operating licenses in the country at the beginning of this year.
DNO has a stated goal of being a leading, independent oil exploration and production company in the Middle East and North Africa, and also has operations in Oman, the United Arab Emirates, Tunisia and Somaliland. Risk, its executives have said before, is part of the business, as it is for many oil companies including state-controlled Statoil, which suffered a terrorist attack on its operation in Algeria last year. DNO’s stock was trading at around NOK 18 per share at midday on Monday, up 5.44 percent from Friday’s close.