DNO Drilling in Iraq On-Track

DNO International reported that the Tawke # 12 well was previously drilled to the top of the Cretaceous reservoir section using one of the larger drilling rigs, and thereafter temporarily abandoned. The well was re-entered by the new carrier rig and the Cretaceous reservoir section has been now been penetrated. A total of 131 meters of cores were taken in the Cretaceous and the observations while drilling and coring confirm oil in the reservoir as expected.

The well has now been deepened into the top of the Jurassic section and oil shows have been observed while drilling. The Jurassic section represents another reservoir target which will be further evaluated within the Tawke area as well as in the other areas of the PSA's.

The forward plan is now to test and complete the Tawke # 12 well as a Cretaceous producer. Thereafter the carrier rig will move to Tawke # 5 to undertake a re-completion of the well.

As previously reported the two larger rigs under operations by DNO were released from the Tawke field in November 2007 after drilling Tawke # 11 and # 12 down to the top of the Cretaceous reservoir horizon. Both rigs are now drilling exploration wells in other areas of DNO's PSA's.

Drilling of the Hawler # 1 well commenced on 14 November 2007 as the first well in Erbil PSA area. As previously reported influx of oil was observed while drilling through the top of the Cretaceous reservoir horizon. Oil shows were also observed in several additional intervals in the Cretaceous as well as in the Jurassic while drilling. A 7" liner has now been installed but retrieval of certain equipment being used to install the 7" liner has caused some delays in the operations. An open hole test in the Jurassic just below the 7" liner shoe is currently in preparation and will be undertaken before further deepening the well to evaluate additional potential reservoir horizons. An extensive test program will thereafter be undertaken in the well. An appraisal well will be drilled immediately after completion of Hawler # 1 subject to the testing confirms commercial flow rates of oil.

Drilling of the Summail Extension # 1 well commenced on 19 November 2007. The well is currently drilling at 2,710 meters. Oil shows have been observed in several levels while drilling trough the Cretaceous interval. Following a drilling break with substantial mud losses within one particular section of the Cretaceous interval a short open hole test was conducted. No hydrocarbons were produced during this short flow period. The well will now be drilled to also evaluate the Jurassic interval and the total depth of the well is expected to be approximately 4,000 meters. Once at total depth a full evaluation will be undertaken to investigate the significance of oil shows encountered in the well.The Summail Extension prospect is located in the south-western area of the Dihok PSA.

Seismic acquisition is still ongoing in the Dihok PSA, with seismic interpretation being undertaken simultaneously. This will form the basis for several exploration targets to be drilled in 2008.