The $1.6 bn purchase of Sval Energi will depress DNO’s near‑term cash‑flow generation but improve the quality and scale of that cash flow over the medium term. The acquisition was funded largely through a mix of new debt and a modest equity‑linked bridge loan, pushing the company’s net debt to EBITDA ratio from roughly 2.3× pre‑deal to about 3.0–3.2× on a trailing‑12‑month basis. Operating cash flow for Q2 already jumped 37% to $258 m, yet the acquisition’s amortisation and interest expense will shave roughly $120–$150 m from free cash flow this year. Assuming the added Sval assets deliver their projected 2026‑2028 production uplift (≈15‑20% increase in net cash‑flow), leverage should gradually fall back toward the 2.5× range by 2028, provided commodity prices stay above current forward curves.
From a trading standpoint, the dividend hike signals board confidence in the post‑deal cash‑flow profile, which tends to support the share price in the short run. The stock is currently trading near its 200‑day moving average with modest upside momentum (RSI ~58). However, any deviation in oil price volatility or slower integration of Sval’s assets could trigger a pullback as investors re‑price the higher debt load. A prudent approach is to look for a breakout above the $6.50 resistance level on volume—this would confirm that the market has priced in the leverage premium. If the price stalls or falls back toward the $5.80 support, a small‑scale short or hedge using put spreads could be justified, while maintaining exposure for the dividend yield until the cash‑flow tailwinds from the acquisition become evident.