April 2011

Yemen production

DNO's WI production in Yemen in April 2011 was 5,457 bopd and the NE production was 2,696 bopd.

Production in Yemen is reported as follows:

The production figures include crude oil consumed in the operation of the Company’s production facilities, at an accumulated WI volume of 268 bopd and NE volume of 115 bopd in April 2011.

Kurdistan production

DNO's WI production from the Tawke field in April 2011 was 42,078 bopd.

Production from Tawke is reported as follows:

1) In March and April this volume represents diesel produced from crude oil delivered to the Tawke refinery

2) Until further information is made available to DNO for the allocation of oil in the interim period, the Company will not report NE production from Tawke in the monthly production reports. The Tawke WI production will from now on be allocated as described in the 2010 Annual Statement of Reserves and is estimated to vary between 62% and 64% over field life.

The production figures include crude oil consumed in the operation of the Company’s production facilities, at an accumulated WI volume of 152 bopd in April 2011.

DNO has been informed that the Prime Minister of KRG has approved payment to DNO in the amount of USD 103.7 million for February and March crude oil exports. The Company has also been informed that the payment instruction have been submitted to the Ministry of Finance within the KRG for immediate payment.

This payment is the first cash advance paid on the account for exported crude oil from Tawke. The KRG has decided to make the payments to DNO and other IOCs strictly on a pro-rata basis by distributing the amount received by the KRG from the Federal Government (US$ 243 million) in accordance with the IOCs share of total exports for February and March.

This cash advance is payment against some of the amounts due in respect of the Tawke PSC and in accordance with the existing arrangements made between the KRG and the Federal Government. In which form the cash advance payments will be recorded in the Company’s accounts will depend on later clarifications from the KRG and therefore net entitlement production from Tawke cannot be reported at this stage.

The gross exported crude oil from Tawke was 63,978 bopd in April. Additional third party crude oil was delivered and exported via the DNO operated facilities at Fishkabour at an average rate of 12,556 bopd, bringing the overall exported rate through these facilities to 76,534 bopd in April.

The gross export volume from Tawke is estimated to further increase to approximately 70,000 bopd in May. Third party export rates are also expected to increase to around 15,000 bopd, bringing the overall export volume to 85,000 bopd for the month of May.

The current production level from the Tawke field exceeds the original design capacity of the facilities by around 20,000 bopd. In addition the performance of the wells and the reservoir over the past months has been excellent and also provided new and significant information. DNO has now incorporated and combined this new information with the recent updated geological- and reservoir technical evaluations undertaken by the Company, as part of the ongoing intermediate revision of the Tawke reserves.

Drilling and well operations

Kurdistan Region of Iraq

Erbil PSC: Bastora-1A horizontal test producer

The Bastora-1 exploration well successfully penetrated the Bastora structure and tested crude oil from two reservoirs.

The Bastora-1A well is a horizontal side-track from the original Bastora-1 discovery well. A horizontal section of 660 m in length has been drilled through one of the oil filled carbonate zones with the objectives of penetrating multiple fracture systems to enhance productivity and furthermore enable the well to be used in an early production concept. Testing of the well has commenced by using artificial lift. Preliminary results indicate initial test rates of 2,000 to 2,300 bopd of crude oil of 18-19 API. The forward plan is to undertake a long term test with the objective to confirm the stabilized and sustainable flow capacity from the well. The crude oil produced during testing will be trucked to the DNO operated facilities at Tawke for export.

Dohuk PSC: Summail-1 Exploration Well

The Summail-1 exploration well was spudded 19 April 2011. The Summail prospect is an undrilled prospect with significant hydrocarbon potential. The drilling is progressing according to plan.

Tawke PSC: Peskhabir-1 Exploration Well

The Peshkhabir-1 well will be drilled after the Summail-1 well is finished in a new prospect named Peshkhabir (previously referred to as West Tawke). The well site is currently being prepared.

Yemen

Alsaiq-1

This well is located in the southern part of Block 47 and was spudded 17 March 2011. The Alsaiq-1 well is considered as a wild cat, as several new play horizons will be tested. The well has now been drilled into the metamorphic basement. One combined test has been undertaken in the Kohlan and Shukra formations, but the well failed to flow due to tight reservoir. The well will now be plugged and abandoned. The cost of the well will be part of the cost oil pool under the Block 47 PSA, and recovered from the future Yaalen production which is expected to come on stream midyear 2012.

New exploration acreage

As previously reported DNO is negotiating for new exploration acreage in Yemen (block 48) and Mozambique (Lower Zambezi).

DNO has also applied for a prospecting permit in Tunisia and the Joint DNO/ETAP application was endorsed by the CCH (Consultative Committee of Hydrocarbons) in Tunisia in late April. A final JV agreement will be finalized before final award.

Oslo, 31 May 2011

DNO International ASA

Corporate Communications

Oslo, 1 March 2011 

DNO International ASA Corporate Communications