DNO International ASA - May Production and Drilling Report

PRODUCTION REPORT
 
The Working Interest (WI) production to DNO in May was 21,889 bopd, up 37 % compared to April.
 
The Net Entitlement (NE) production to DNO in May was 13,874 bopd, and the achived oil price was 69,49 USD per barrel.
 
 
Working Interest (WI) Production.
 
 
DNO's oil production (WI) is reported as follows:
 
 
*) As part of the change in Tawke PSC terms DNO was entitled an additional volume of 82,558 barrels produced from start of production in June 2007 until 12th March 2008. This additional volume is booked in 1st quarter 2008
 
Gross production from the Tawke field in May was 12,983 bopd, up more than 100 % compared to previous month. The increase is due to higher sales volumes in the domestic market.
 
 
Net Entitlement (NE) Production and Achieved Oil Price
 
 
Net entitlement production is shown in the table below:
 
 
 
The production figures (WI and net entitlement) include crude oil consumed in the operation of the Company's production facilities, at an accumulated volume of 306 bopd during 1st quarter 2008. Crude oil consumed in April 2008 was 346 bopd and 314 bopd in May 2008.
 
 
SUMMARY OF ONGOING DRILLING ACTIVITIES
 
Yemen
 
 
Block 43
 
Rig 908 spudded the Mesari # 1 exploration well 25th of April. The Qishn sandstone was found to be water bearing, whereas there are indications of hydrocarbon in Saaf formation. The well was logged, completed and temporarily abandoned. The Saaf formation will be tested by use of swabbing equipment at a later stage.
 
Rig 908 was then moved to drill the Nabrajah #18 development well on the same block. The Nabrajah #18 well was spudded 30th of May.
 
Block 47
 
Rig 900 spudded the Sharnah # 1 exploration well on 28th of March as the second exploration well in the block. Oil was encountered in Qishn sandstone, and the well was tested at an oil rate of 600 - 700 bopd with a water cut of 70/80 %. The well was drilled at the flank of the structure and additional appraisal drilling will be undertaken at a later stage. The Sharnah # 1 well was completed as a future potential producer.
 
The rig was then moved and re-entered the Yaalen #1 discovery well where a multiple test programme is currently being undertaken. The first test was carried out as an open hole test of Basement, testing gas at a rate of 2,45 million scf/d with associated condensate rate of 64 bopd. Additional testing of other reservoir intervals is currently in progress.
 
The Yaalen # 2 exploration well was spudded on 2nd of May 2008 with rig 905, and oil was confirmed in the Qishn sandstones through MDT fluid sampling. The well is will be further deepened into Basement before testing is undertaken.
 
Block 53
 
The Sharyoof # 29 development well was drilled and completed as a producer, after which rig 919 was moved to the Sharyoof #30 location. The Sharyoof #30 development well was drilled and completed in the period 18th of May to 10th of June, and brought on stream at an initial gross rate of 430 bopd. The rig will be moved to the Bayoot  #6 well location within the same block.
 
 
Kurdistan Region of Iraq
  
Tawke PSC area
 
The Tawke # 11 was re-entered by the Sindy carrier rig, and drilled into the top of the Jurassic interval, where indications of a fracture system were observed. A 7" liner was installed through Cretaceous, after which the top of the Jurassic interval was open hole tested confirming water at this level. The open hole section was subsequently plugged off, and two DSTs was then undertaken in the lower part of the Cretaceous interval, testing at a maximum gross rate of 8,500 bopd on 3" choke. The well will be completed without further testing, as a combined production and observation well.
 
The Jurassic interval within the Tawke PSC area will be subject to further exploration, and will be drilled by a combined Cretaceous delineation well and Jurassic/Triassic exploration well . This well, Tawke # 15, was spudded 20th of May
 
Dohuk PSC Area
 
The Summail Extension # 1 well was temporarily abandoned 9th of May to allow for later re-entry and sidetrack, and GWD#9 rig was then moved to the Tawke # 15 well location on the Tawke PSC.
 
Erbil PSC Area
 
TheGWD#10 rig spudded the Hawler #2 exploration well 8th of May. The well is primarily targeting Jurassic/Triassic intervals to further explore the discovery in Hawler #1 well and secondly to clarify the potential of the Cretaceous formation in the area.
 
 
DNO International ASA
18th June, 2008