DNO ASA - Equatorial Guinea Status and Forward Plan

The Production Sharing Contract ("PSC") was signed in April 2003 and covers an area of 1333 km2. The license is operated by Devon Energy which has a 38.4 % interest in the block. The other partners are Petronas (31%) Atlas Petroleum (5.6%) DNO (5%) and GEPetrol (20%) (carried during Exploration Phase)
The Exploration Work Program commitment consists of 2 sub periods each of 2 years duration with a 2 well program in each period. This commitment has been now been fulfilled with the completion of well P-4.
West Africa provides a substantial number of opportunities for oil and gas exploration and production, and several large discoveries have been made during the past 10-15 years.
The offshore area of Equatorial Guinea is an emerging region that has been opened for extensive exploration activities. By participating with a small interest in Block P, DNO has gained access to results from drilling operations as well as first hand information on geological and seismic data and interpretations in this exciting and prospective area. This knowledgebase is valuable and essential in the ongoing work to consider the Company's future position in the region.
Well P-1
The P-1 well was drilled in September/ October 2004 with the drilling rig 'Aleutian Key'. The well reached a total depth of 7829 ft. TVD and tested five geological targets in the Upper Cretaceous formation. The well demonstrated that the major elements of the hydrocarbon system, source, migration and reservoir are present in the prospect area known as Jupiter. However the expected channel sands were mostly shale filled and the sands encountered were tight. The hydrocarbons experienced were not commercial, and the well was therefore plugged and abandoned.
Well P-2
The P-2 well was drilled in August 2005 also with the drilling rig 'Aleutian Key'. The well reached a total depth of to 7083 ft. TVD, but did not reach planned TD due to some drilling problems. The well was therefore sidetracked to investigate the down dip portion of a different reservoir sandstone seen in the original P-2 section, but no hydrocarbons were found at this level.
The P-2 and P-2 side track penetrated 150 ft. and 114 ft. of pay respectively. No oil water contact was seen on the P-2 original hole, but an oil water contact was penetrated near the base of the main reservoir sand on the P-2 Side Track. The P-2 original hole was plugged and abandoned as a discovery well, and the P-2 Side Track well was temporarily abandoned as an oil discovery for possible future re-entry. The oil discovery confirmed by P-2 and P-2 Side Track has been named Green Sand, and contains estimated gross recoverable P50 reserves of 33 million barrels.
Well P-3
The P-3 well was drilled in December 2006 with the drilling rig 'Zagreb 1'. The well reached a total depth of 6145ft. TVD within the Campanian Formation. The well did not encounter movable hydrocarbons, and the well was plugged and abandoned.
Well P-4
The well was drilled back-to-back to P-3 with the same drilling rig. The well reached a to a total depth of 6200 ft TVD and encountered oil and gas in several thin reservoir layers. The well was plugged and abandoned, and the information from the well is currently being analyzed together with other regional information to investigate the significance of the hydrocarbons found in the well.
Based on the current estimates the Green Sand discovery holds 33 million barrels of gross recoverable oil reserves on a P50 basis. The Operator will now undertake a feasibility study to evaluate the commercial viability of the project, and studies are also ongoing to evaluate all available information acquired from the block in order to support decisions on further exploration and appraisal activities within the area.
Several prospects in the vicinity of the Green Sand oil discovery have been identified by seismic interpretation, which represent a potential for additional reserves.
If a field development takes place for the Green Field oil discovery, this could also contribute to DNO's overall experience and expertise and at the same time provide an opportunity for DNO to contribute with its North Sea experience and technological know how to the project.
Helge Eide, Managing Director of DNO ASA comments:
Through our participation in Block P, Equatorial Guinea to date, DNO has gained valuable experience and expertise within a new and prospective area, at a relatively low financial exposure.
We are encouraged with the recent update on the forward plans for the license, and if a field development plan is agreed this could add further operating knowledge to DNO of this region.
March 23, 2007