Oslo, 17 August 2012 -- DNO International ASA ("DNO International"), the Norwegian oil and gas company, announced today that its share of oil exports from the Kurdistan Region of Iraq has averaged 40,000 barrels per day from startup ten days ago and that the Company will continue to deliver these volumes at least through the first week of September as requested by the Kurdistan Regional Government (KRG).
DNO International is also nearing completion of its obligation to the KRG under a previously disclosed protocol to reconcile past accounts and commence application of the fiscal terms and conditions of the existing Production Sharing Contract covering the Tawke license as from 1 June 2012. To meet this obligation, DNO International allocated its share of Tawke production to the KRG for local consumption during June, July and part of August.
The reconciliation calculation does not include current exports nor volumes exported in 2009, 2011 and 2012 for which payments remain outstanding. Those payments will be recorded when received.
Under International Financial Reporting Standards (IFRS) rules, the full impact of the reconciliation of accounts since 2007 has been taken in the second quarter of 2012, contributing to a net loss of NOK 190 million on operating revenues of NOK 140 million. The second quarter results have also been impacted by the shutdown of oil production in Oman due to an offshore pipeline blockage and the associated cost of repairs. The Company's first half 2012 results remain positive with net profit of NOK 118 million on operating revenues of NOK 851 million.
""Second quarter losses interrupt a string of four quarters of back-to-back profitability, which is disappointing. On a positive note, under the agreement with the KRG, we will now receive our pro rata share of Tawke cost oil and profit oil as provided for in the original contract," said Bijan Mossavar-Rahmani, DNO International's Executive Chairman. "Meanwhile, we hope our participation in the delivery of significant export volumes during August will contribute to the resolution of the internal differences in Iraq and lead to recovery of payments due for past and present oil exports by DNO International to enable us to continue to support this new initiative by the KRG," he added.
In ongoing operations in Kurdistan, the Tawke-18 well, designed to increase Cretaceous production and test a target below the main field-bounding fault, is drilling ahead at 2,359 meters. On the Erbil license, a horizontal well drilling ahead at 1,490 meters will further appraise the Benenan discovery and contribute additional production. Additionally, the Company is currently mobilizing a second rig for its first deep test of the Jurassic and Triassic potential identified within the Tawke field; the well is expected to commence drilling in September.
In Block 8 offshore Oman, the Company has addressed a blockage since late March in the 12-inch pipeline connecting the West Bukha and Bukha platforms by replacing a 4.3 kilometer section of the line. West Bukha oil and gas production is expected to resume by the end of the month with the two previously producing wells joined by a third newly completed development well, accelerating the recovery of deferred production. A fourth West Bukha development well is progressing according to plan and is drilling ahead at 3,272 meters.
In Yemen, DNO International has launched its new drilling campaign by completing the Tasour-27 infill well, currently producing 250 barrels per day. Another infill well in the Nabrajah field in Block 43 was spud earlier this month. And the development of the Yaalen field in Block 47 is ongoing with first oil expected in the third quarter of 2013 following installation of early production facilities with gross capacity of 5,000 barrels per day. A permanent processing facility will be installed later with a capacity of 10,000 barrels a day.
--- DNO International ASA is an Oslo-listed, Middle East and North Africa focused oil and gas company holding stakes in 17 licenses in various stages of exploration, development and production both onshore and offshore in the Kurdistan Region of Iraq, the Republic of Yemen, the Sultanate of Oman, the United Arab Emirates and the Tunisian Republic. http://www.dno.no ---
Oslo, 17 August 2012
DNO International ASA
Queries: Tom Bratlie (email@example.com or tel: +47 905 21 904)
This information is subject of the disclosure requirements acc. to §5-12 vphl (Norwegian Securities Trading Act)