Updated Reserves in Nabrajah, Block 43 Yemen

Based on the first evaluation of the recent Basement and Kohlan oil discovery, the proven and probable reserves in the Nabrajah field are estimated at 68 million barrels (44 million barrels net to DNO, pre-tax). This will increase DNO's total proven plus probable reserves to 75 million barrels.

A 932 sq. km development area in Block 43 has now been approved by the Yemen authorities.

Revised Nabrajah Reserves

As previously reported, Nabrajah # 5 confirmed the presence of oil in both the Basement and the Kohlan formations. The Basement interval produced 5,800 BOPD and the Kohlan produced 4,180 BOPD during production testing. Nabrajah # 5 has been suspended for future use as a Basement and Kohlan oil producer.

The Basement and Kohlan oil discoveries in Nabrajah # 5 are different hydrocarbon systems than the shallower Qishn reservoir, which until now has formed the reserve basis for the Nabrajah Development. Based on DNO's first evaluation the oil discoveries made in the Basement and Kohlan intervals in Nabrajah # 5 have increased the combined proven and probale reserves in Kishn, Kohlan and Basement to 68 million barrels (44 million barrels net to DNO, pre-tax).

As a consequence of the Basement and Kohlan oil discoveries, the Block 43 partners have revised the drilling schedule. Nabrajah # 6, which is currently being drilled, is intended as a Qishn water injector for reservoir pressure maintenance. Thereafter a Basement appraisal program will be undertaken, which could include the drilling of up to 4 additional Basement wells in 2005.

The Basement is producing oil in both Block 10 (operated by Total) and Block 14 (operated by Canadian Nexen Petroleum Yemen), and has become an important target for exploration drilling in the Masila basin. The recent Basement oil discovery in Nabrajah # 5 supports the probability of significant oil potential in Block 43, which could be developed cost efficiently through the Nabrajah production facilities.

Following the Basement oil discovery in Block 43, DNO will increase its focus on Basement prospects in its other licenses in Yemen, and the company has already launched a study to identify Basement drilling targets in Block 32.

Revised Production Capacity of The Nabrajah Field

The first stage of the Nabrajah Field Development is nearing completion and first oil is expected at the end of June. The initial production capacity will be 5,000 BOPD (gross), increasing to 15,000 BOPD (gross) during August 2005.

As previously reported, some of the initial production facilities have been arranged through lease contracts in order to accelerate production start-up and to ensure an optimized design of the permanent facilities. As a consequence of the revised oil reserves reported above, the capacity of the production facilities will be increased stepwise to 50,000 BOPD, and full production capacity is expected to be achieved in the 4th Quarter 2006.

Block 43 partners are DNO as operator with 56.67%; Oil Search (Yemen) with 28.33%; The Yemen Company with 15% (carried).