DNO Reports on Production Results in Yemen, Kurdistan Region


Tawke area of Iraqi Kurdistan
(Click to Enlarge)

DNO has reported its production for third quarter 2009. DNO's working interest production was 44,578 bopd in third quarter. DNO's net entitlement production increased from 11,753 bopd in second quarter to 29,783 bopd in third quarter.

Yemen Production

DNO's working interest (WI) production from Yemen in third quarter 2009 was 7,542 bopd and DNO's net entitlement production was 4,987
bopd. Average realized oil price for the Yemen net entitlement production in third quarter was 69 USD/bbl.

The decline of oil production from the Yemen fields has to a high extent been compensated by well optimization work and effect of new infill wells. A small repair of the export pipe line from the Block 32 Tasour field caused shut-in of oil shipment to the terminal for 3 days in September. Further optimization of the permanent remote process and export facilities at the Bayoot field in Block 53 is ongoing. The production rate from the Bayoot wells has improved after the installation of down-hole pumps in the wells, and has been averaging at approximately 3,855 (gross) in the third quarter.

The production figures include crude oil consumed in the operation of the Company's production facilities, at an accumulated volume of 295
bopd in third quarter 2009.

Tawke Production

DNO's working interest (WI) production from the Tawke field in Kurdistan in third quarter 2009 was 37,036 bopd and DNO's net entitlement production was 24,796 bopd.

Gross production in third quarter was 41,157 bopd. Out of total gross production, gross export volume from Tawke was 34,634 bopd. Local
sale of crude oil to the domestic market in third quarter contributed with 6,387 bopd. Inventory changes affect the sales figures.

Summary of Ongoing Drilling Activities in Yemen

Drilling of infill production wells has commenced both in the Block 32 Tasour Field and the Block 53 Bayoot Field. This will be followed up by drilling a horizontal production well in the Block 43 Nabrajah Field, which is expected to start late October.

The exploration well Harad #1 in Block 52 was concluded as a dry well, after having tested a structure in Block 52 in early September. Only some minor oil shows were encountered in the Qishn sandstone reservoir. The side-track drilling of well Raoq-1S in Block 53 proved again movable oil both in Cretaceous and Jurassic carbonates. However, the well failed to produce oil at commercial rate and the well is abandoned and expensed in third quarter.

Kurdistan Operations

Export of crude oil from the Tawke field commenced June 1, 2009 and continued until September 21, 2009. In this period the Tawke
production and export increased in line with the plan agreed with the KRG and North Oil Company (NOC), and the Tawke facilities have been
tasted at their design capacity. The average deliveries in August from Tawke were close to the design capacity.

As previously reported KRG suspended all DNO's operations in the Kurdistan Region with immediate effect 21 September. All issues with
respect to the suspension were resolved October 5 and DNO's rights to its production sharing contracts were reinstated with immediate
effect. Going forward DNO will focus on local sales until a future payment mechanism for crude exports is in place.
 

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