DNO Farms-out Stake in Block 43 in Yemen

A farm-out arrangement has been concluded with an Australian based oil company, Oil Search (Yemen) Limited (OSL). OSL will participate in the block with 25% working interest with effective date September 1, 2003. DNO's new interest after the farm-out is 50%.

OSL will pay DNO an entry fee of $2.2 million and make a further two-for-one payment of the costs of the first of the two remaining commitment wells on the block. All other expenditures will be paid by OSL in accordance with its interest share. The two commitment wells are planned drilled end 2003 and early 2004.

DNO has through this farm-out reduced its risk of the remaining exploration program and maintained a substantial share of the license.

DNO is the Operator of Block 43 in Yemen with a working interest of 75%.

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