DNO Reports Good News from Northern Iraq

DNO is encouraged by the early results of its exploration activities in the Tawke area of Iraqi Kurdistan.

In late March, DNO reported that its Tawke # 1 well was nearing its total depth and all exploration objectives had been met. On Monday, the company said that the well data acquired to date have been reviewed and evaluated. Interpretations of wireline logs and other well data show the presence of oil in five reservoir intervals. Based on these results, the company has decided to perform several well tests in Tawke # 1.

The objectives of the well tests in Tawke # 1 are to evaluate the production capacity of the individual reservoir intervals and to determine the characteristics of oil.

Testing of Tawke # 1 will be undertaken before moving the rig to the next well location. Following the completion of the testing program the rig will move to the location of Tawke # 2 some 2 kilometers west of Tawke # 1. DNO said that the expected drill depth of Tawke # 2 is approximately 2,000 meters.

DNO is undertaking feasibility studies for future possible oil production from the Tawke Area, including a fast-track option. Based on the results to date and contingent on successful outcome of the well tests, first test production of oil from the Tawke Area could begin in early 2007.

DNO has also contracted a second rig from Greatwall Drilling Co., which will be mobilized to the production sharing agreement area of operations in June. This rig has the same drilling capabilities as the first rig. In addition, 3D seismic acquisition over the Tawke Area is slated to begin next month.

"We are very pleased to have drilled our first exploration well in Iraqi Kurdistan, which represents another milestone achieved by DNO," said Helge Eide, DNO managing director. "The considerable efforts by our project team have ensured that the drilling has been undertaken successfully and safely. This demonstrates DNO’s capabilities of undertaking challenging operations as a prudent operator".

"We would also like to give credit to the Kurdistan Regional Government for their valuable assistance and cooperation in planning and execution of our operations," added Eide. "We are looking forward to receiving the results from the well testing, which will serve as an important and valuable strategic indicator for the future plans of our joint project with the KRG in Iraqi Kurdistan."