DNO Reports on Production in Kurdistan Region

DNO has released its August 2008 production figures.

DNO's Working Interest (WI) production in August was 8,349 bopd compared to 20,584 in July. The decrease in WI production in August is due to temporary halting of test production from the Tawke field. The lower production in Yemen in August is primarily due to 3 days shut in for regular maintenance and an update to the CPF at the Nabrajah field in Block 43. The year to date WI production to DNO at end of August was 17,812 bopd, which is well ahead of plan.

As previously reported the KRG put temporarily on hold all the production for the local market in the Kurdistan Region, to enable the local authorities to review the licensing, compliances and uniformity of procedures applied to the small topping plant owners in order to regulate the manner that crude oil is supplied to them,
including crude oil pricing issues and the quality of the products generated by the topping plants.

During this period, DNO has installed pressure gauges for recording of updated static pressure information across the field. In addition pressure gauges have also been installed in new wells for monitoring pressure development during the next stage of test production. This will provide important information for the long term production potential as well as production sustainability of these wells.

The next stage of test production from Tawke has now resumed, and the volumes produced will be lifted by KRG who will also process the crude oil for local needs. Future reporting of test production to the Company from Tawke or any other fields, will be based on revenue entitlements rather than volumes, as test production does not reflect the normal operational performance or production capacity of the fields.