DNO Makes Third Discovery on West Heather

DNO has completed its third well in the West Heather structure on the UK shelf. Log data confirm a gross reservoir thickness of approximately 55 meters (180 feet), and a net reservoir thickness of approximately 38 meters (125 feet), which is better than expected.

The well confirms that the West Heather structure contains at least 100 million barrels of oil in place, of which approximately 35 million barrels (DNO's share approx. 19 million barrels) are recoverable oil (proved + probable).

Well 2/5-20 is the third well to be drilled and suspended on West Heather and is the second well of a two well farm-in by Challenger Minerals Inc, a subsidiary of GlobalSantaFe and Palace Exploration Company who collectively stand to earn 45 percent interest. DNO holds a 55% interest. The well was drilled on a turnkey arrangement utilizing GlobalSantaFe's rig Glomar Arctic IV.

The three wells drilled to date by DNO in the West Heather structure, are planned to be used as production wells. The development plan for the field will now be finalized and this includes tie-back of the three production wells to the Heather platform by means of a 7.5 km long pipeline. Plans include two water injection wells to be drilled in the field at a later date.

After the development of the West Heather structure has been completed, the second satellite structure, North Terrace, will be developed with two production wells and one water injection well. Recoverable oil reserves (proved + probable) in the North Terrace structure are estimated at approximately 10 million barrels, of which DNO's share is some 5.5 million barrels.

By developing the two Heather satellites, an additional 20 million barrels of oil may be recovered from the main field, of which DNO is the sole owner, enabling oil production from the Heather platform to continue for at least another 10 years.

Total recoverable oil reserves (proved + probable) in the Heather area are currently estimated at some 65 million barrels, of which DNO's share is approximately 45 million barrels. The reserves estimates have also been confirmed in a recent report prepared by independent engineers.