Petro SA and DNO Dissolve Agreement for Inhaminga Block

DNO will be reimbursed approximately US $4.8 million as a result of a non-concluded farm-in agreement of a 40% working interest in Inhaminga Block in Mozambique.

In 2004 DNO and PetroSA of South Africa negotiated and signed an agreement for PetroSA to acquire a 40% working interest in the Inhaminga Block in Mozambique.

As a consequence of a change in PetroSA's exploration strategy, the agreement was not closed and concluded. However, PetroSA has now agreed to reimburse to DNO approximately 40% of the exploration work already undertaken, which amounts to approximately US $4.8 million.

As DNO expensed these costs in its 2004 accounts, the amount reimbursed by PetroSA will be reflected as a positive effect in DNO's 1st Quarter 2005 accounts.

Following the drilling of two exploration wells in 2004, the committed work program in Inhaminga Block has been completed. DNO is currently undertaking a technical review of the seismic- and other geotechnical data in the license with a view to identify additional exploration prospects within the license area.

DNO has a 80% working interest and is Operator in Inhaminga Bock, Mozambique.