Oil firm DNO surges after strong Q3 results and lower capex guiding

(Adds analysts, background and quotes from chairman)

Nov 10 (Reuters) - Shares (Berlin: DI6.BE - news) in Norwegian oil company DNO surged on Thursday as it posted forecast-beating operating profit in the third quarter and guided for lower 2016 capital spending than expected by analysts.

** Q3 operating result came in at $9 million (Reuters poll $5.3 million) while Q3 revenues was $49 million in the quarter. (Reuters poll $47.9 million)

** "The cash flow increased by 17 million dollar in the quarter even though they only received two of the three scheduled payments from the KRG," Pareto analyst Trond Omdal said

** The Kurdistan Regional Government (KRG) owes international oil companies billion of dollars, but has started making more regular payments to exporters

** It was also positive that the firm, which has operations across the Middle East, took down its capex guidance for the year by $30 million, said Omdal who has a "Buy" rating on DNO (LSE: 0MHP.L - news)

** Analyst Teodor Sveen-Nilsen in Swedbank (LSE: 0H6T.L - news) said he most likely would keep a "Buy" recommendation on the stock after the report

** "Payment regularity (from KRG) has improved substantially and the oil price is on its way up. For DNO we see potential for decent cash flow and EPS of around NOK 1 in 2018. We think it is worth a bet", Sveen-Nilsen wrote in a note to clients

** DNO's proposal to acquire Gulf Keystone had expired as certain conditions to the financial restructuring set by Gulf Keystone appear not to have been met, Executive chairman Bijan Mossavar-Rahmani told an analyst presentation

** Mossavar-Rahmani said DNO is willing to make a new cash offering for the company: "We have had a chance to review a reserve report, and based on that, DNO are prepared to revisit a proposal for Gulf Keystone and are prepared to consider a transaction in cash but it will have to be at a discount from the previous 300 million offer"

** DNO had a working interest production of 70,300 boepd in the quarter, slightly lower than expected (Reuters poll 72,824 boepd)

** DNO shares rose 5.7 percent to 7.2 crowns at 1316 GMT while the Oslo Bourse main index was up about 1 percent Source text for Eikon: Further company coverage: (Reporting by Gwladys Fouche and Joachim Dagenborg)