DNO has been advised by the Kurdistan Regional Government (KRG) that it has completed the assignment of a 25% Third Party Interest in the Tawke Production Sharing Contract (PSC) to Genel Enerji. This right of appointing an additional party to the PSC is included in most of KRG's contracts, and in the case of Tawke, the right was scheduled to be exercised by the end of 2008.
The assignment process started in the last quarter of 2008, and it was agreed to by the end of last year, and all remaining formalities were recently finalized. The assignment is effective from Jan. 1, 2009, for the purposes of paying costs.
DNO has been further advised by the KRG that it has also completed the assignments of the Third Party Interest in the Duhok PSC, also to Genel Enerji and the Erbil PSC to another private investor. Duhok and Erbil are still in the exploration/appraisal phase.
Following the assignment KRG still retains its own 20 % Government carried interest in each of the Tawke, Duhok and Erbil PSC's. With the completion of these assignments DNO's 100% cost paying obligations will be reduced to 75% for Tawke, and to 60% for each of Erbil and Duhok. DNO maintains its 55 % working interest in the Tawke PSC, and 40% in each of the Erbil and Duhok PSCs. DNO continue to be the Operator of the Contracts under each of the PSCs, and shall be entitled to recover approximately US $15 million in past costs related to these assigned interests.
Genel Enerji, is a Turkish registered company owned by the Çukurova Group and has been working in the Kurdistan Region since 2002. Genel Enerji has a 44% working interest in the Taq Taq oilfield and also holds an interest in the Kewa Chirmila exploration project. The Çukurova Holding Group is among Turkey's largest industrial and commercial conglomerates with numerous investments ranging from automotive, telecommunications, media, textiles, energy, transportation and information technology services.
Genel Enerji has also advised DNO that it has a beneficiary ownership of around 4.8% of the DNO International ASA shares, which were bought in the last quarter of 2008.