DNO Spuds Jaguar Well

DNO reports that well 211/22b-5, located on the Jaguar prospect on the UKCS was spudded on January 23, 2006.

The planned total depth of the well is approximately 4,000m, and drilling is expected to last approximately 45 days, assuming no downtime. The well will be drilled using the semisubmersible, Bredford Dolphin.

The Jaguar prospect is a stratigraphic trap located in the Northern North Sea Block 211/22b (License P1067) to the northeast of the Cormorant North oil field. The unrisked resource potential of the Jaguar prospect is estimated at 138 million barrels (69 million barrels net to DNO), assuming exploration and commercial success.

Under a farm-in agreement signed in July 2005, DNO UK Limited ("DNOUK"), a 100% subsidiary of DNO, agreed to secure a 60% working interest in Block 211/22b from Elixir Petroleum Ltd. by contributing 92.5% of the Jaguar well costs. Elixir retains a 40% interest and will contribute the remaining 7.5% of the well costs.

In a subsequent earn-in agreement announced on 30 November 2005, DNO UK will transfer a 10% interest in License P1067 to Rocksource ASA, a Norwegian E & P Company specializing in front edge exploration technology, in return for Rocksource funding 15.42% of the well costs.

Commenting on drilling the Jaguar prospect, Helge Eide, Managing Director of DNO said:
"DNO is pleased to be back as an Operator on the UKCS. The Jaguar prospect is a new and exciting exploration play in the North Sea holding a substantial hydrocarbon potential. Drilling the Jaguar prospect forms a part of our extensive 2006 exploration program, where our continued focus and efforts will be to transform potential resources to reserves at low costs."

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