DNO has signed revised agreements with the Kurdistan Regional Government ("KRG") amending the production sharing contract it holds for the Dohok and Erbil license areas. The Dohok area has been divided into two license areas, one for the Tawke oil field and one for the remaining Dohok area.
The Hawler # 1 exploration well, being the first exploration well within the Erbil PSC license area, has been testing approximately 9 000 barrels of oil per day and 11 million standard cubic feet per day from an open hole test in the Jurassic interval.
The Company now holds three Production Sharing Contracts (PSC) in Kurdistan with a 55% working interest in Tawke and a 40% working interest in both Dohuk and Erbil.
The balance of the working interests in all PSC's is held by the KRG as a Government Interest and Third Party Interest to be appointed by the KRG.
Commenting, Helge Eide, Managing Director said, "Signing the three PSC's represents a new and important milestone to the joint cooperation between our partner KRG and DNO."
The new terms of our PSC's are now in line with the recently enacted legislation and we are pleased with the overall terms of the contracts. As a result of the joint efforts undertaken by KRG and DNO, substantial progress has been made since commencement of operations in 2005, and the Tawke oil field was successfully developed as a fast-track and low cost project with test production commencing within one year of discovery. We are also very encouraged by the recent news from the Hawler # 1 well, which we hope will form the basis for our second field development within the Region".
Dr. Ashti Hawrami, Minister for Natural Resources of the KRG, said, "The KRG is very pleased with the outcome of this review. DNO has been a long-term friend of the Kurdistan Region, and we look forward to a continued strong relationship. This completed review with DNO means that all of the KRG's existing contracts have been successfully reviewed. With very promising well-testing in recent months, DNO are ready to export oil from the Region, and we will ensure that they are able to do so. This will be a tremendous benefit for the Region and all of Iraq."
The purpose of the amendments is to bring the PSC's into conformity with the Oil and Gas Law of the Kurdistan Region of Iraq and the standard commercial terms published by the KRG last year, including royalty, cost recovery and profit sharing components.
The review was conducted by the KRG in accordance with Article 54 of the Oil and Gas Law which required review of the PSC's by the Regional Council for the Oil and Gas Affairs of the Kurdistan Region-Iraq, taking into consideration the prevailing conditions when the PSC's were originally entered into.
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