DNO All Grins with 40% 2007 Production Increase

DNO's production in the fourth quarter was 15.762 bopd, with the average realized oil price in the quarter being 72,71 USD/bbl. Exit production for 2007 increased to 18.000 bopd, up 40 % compared to the 2006.

In the Kurdistan region of Iraq, the Hawler # 1 exploration well has encountered strong indications of oil in several reservoir horizons while drilling. As a result of these observations an extensive test program will be carried out in the well.

The slight drop in Tawke production in December compared to November was due to the holiday season during second half of December. However the production at year end increased to approximately 7.000 bopd.

In Yemen two new wells have recently been brought on stream (Godah # 8 in block 32 and Nabrajah # 16 in Block 43). DNO's share of the production from Yemen at year end was approximately 11.000 bopd.

Following testing of Tawke # 1 which delivered a maximum flow rate of 23,000 bopd aggregated from three tests, the carrier rig re-entered Tawke # 2 for final completion. The rig has now moved to the Tawke # 12 location to drill the Cretaceous reservoir section. Thereafter the well will be tested, and if commercial oil rates are achieved the well will be completed as an oil producer.

The two larger rigs under operations by DNO were released from the Tawke field in November after drilling Tawke # 11 and # 12 to the top of the Cretaceous reservoir horizon. Both rigs are now drilling exploration wells in other areas of the PSA's.

Drilling of the Hawler # 1 well commenced on 14 November 2007 as the first well in the Erbil PSA. The well has now reached a depth of approximately 3.400 meters. While drilling through the top of the Cretaceous reservoir horizon an influx of oil was observed. Oil shows have also been observed in several additional intervals while drilling. The forward plan is to install a 7-inch liner and prepare for an extensive test program in the well. Before commencement of the testing the well will be further deepened to evaluate some additional potential reservoir horizons.

If the tests confirm commercial flow rates an appraisal well will be drilled immediately after completion of Hawler # 1.

Drilling of the Summail Extension # 1 well commenced on 19 November 2007. The well is currently drilling at 2.160 meters with the total target depth of the well being approximately 4.000 meters. The Summail Extension prospect is located in the south-western area of the Dihok PSA. Seismic acquisition is also currently ongoing and another 8 leads and prospects have so far been identified as potential future drilling targets in the Dihok PSA area.

All 3 rigs operated by DNO in Kurdistan region of Iraq are expected to be in operation throughout 2008.


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