DNO Completes Second Production Test on Neheb-1 in Yemen

The second of two production tests in the Neheb-1 well in block 43, Yemen has now been completed. The test was carried out in the upper of the two zones to be tested in the Qishn sandstone reservoir. From this zone too, only formation water was produced, and thus the hydrocarbons observed during drilling are not movable.

Neheb-1 was drilled in a separate structure about 17 kilometers southeast of the Nabrajah-1 oil discovery. The Neheb-1 test results, therefore, will not affect the previously announced plans for the preparation of a field development plan for the discovery in the Nabrajah-1 structure.

The block 43 partnership has contracted a new drilling rig to drill two wells to delineate and evaluate the Nabrajah-1 discovery, starting in mid-July 2004. As previously announced, DNO's oil reserves estimate for the Nabrajah-1 structure is some 10-12 million barrels (100%). The Neheb-1 results do not change this estimate.

Provided that a field development plan for the Nabrajah discovery is submitted for approval by the authorities in Yemen towards the end of the year, production may start in the third quarter of 2005. The development concept will be based on DNO's positive experience from the Tasour and Sharyoof projects. Oil from these fields is exported via the infrastructure of block 14, of which Nexen is operator, producing over 200,000 barrels of oil per day.

The Neheb-1 well will be temporarily abandoned and the drilling results will be further evaluated. The drilling rig will be moved to the Tasour field where a new production well is to be drilled in the central part of the field.

DNO is operator and holds a 50% interest in block 43.