DNO ASA - Northern Iraq - Update

DNO is pleased to announce an update on activities in Northern Iraq:
  • Agreement for increased working interest in the PSA's
  • Tawke Early Production Development
  • Drilling and seismic activities
    Agreement for Increased Working Interest in the PSA's:
    The agreement with the Kurdistan Regional Government (KRG) whereby DNO will be responsible for 100 % of the funding obligations of the PSA's in return for receiving additional 15 % Working Interest, has now been concluded and signed.
    In addition some adjustments have been made to the Dihok PSA area. Some areas at the eastern boarder have been removed in return for receiving some new acreage to the south. Another area has also been relinquished and no further relinquishments will be required until June 2011.
    It is still very early in the exploration stage of the PSA area's, and a number of additional prospects & leads, which will be further investigated through exploration drilling, have been identified.
    Tawke Early Production Plan
    The Tawke Early Production Plan is based on the successful results achieved from Tawke # 1 / 1A and Tawke # 2 wells.
    Modifications of the Central Processing Facilities (CPF) have been completed and the CPF will now be transported to the Tawke area for installation and commissioning.
    Installation of the pipeline which will connect the Tawke oil production to the main northern pipeline has also commenced, and approximately 8 km has been installed of a total of 42 km.
    As previously reported, the CPF has the capacity to deliver approximately 50,000 bopd of the Tawke crude oil quality. As a result of this DNO will accelerate development drilling within the Tawke area. The full rig capacity (3 rigs) will be dedicated for the most part of 2007 to Tawke. A total of 18 development wells are planned to be drilled in 2007, which includes both oil producers and water injectors.
    Drilling Status:
    Tawke # 2:
    Tawke # 2 was drilled as an appraisal well on the Tawke field. The well is located some 2 km to the west of the Tawke # 1 discovery well.
    As previously reported, Tawke # 2 tested the same reservoir interval which flowed 5,000 bopd in Tawke # 1 and 1A. The Tawke # 2 well flowed 3,840 bopd, confirming good reservoir quality also at this location. Testing of an underlaying carbonate formation was also undertaken, but no oil flow rates were achieved. Tawke # 2 is now completed as an oil producer.
    The rig has now moved to the Tawke # 4 location some 0.8 km to the north-east of Tawke # 1. Tawke # 4 will be drilled as a dedicated oil producer.
    Khanke # 1:
    Khanke # 1 has been drilled to a total depth of 3,551 meters. Testing was undertaken in three individual intervals which had hydrocarbon shows while drilling, but no oil flow was achieved. As Kanke # 1 is located within the Dihok PSA area, the well costs are recoverable from future Tawke oil production under the cost oil entitlement.
    The rig will now be moved to the Tawke # 3 well site on the Tawke structure. This well is an exploration / appraisal well at the eastern extension of the Tawke area. This well will penetrate both the oil producing interval confirmed by Tawke # 1 / 1A and Tawke # 2, as well as the deeper intervals which where proved to be oil bearing in Tawke # 1, but not properly tested. If oil bearing intervals are confirmed and commercial flow rates are achieved, then Tawke # 3 will be completed as an oil producer.
    Mobilizing the third Rig:
    A third drilling rig will be mobilized to the Tawke area at the beginning of 2007.  This will be a smaller carrier rig capable of drilling production wells as well as undertake work-overs, well repair and maintenance. The rig will commence operations at Tawke # 1 where some deeper reservoir intervals (> 2,000 meters) will be flow tested. Thereafter the rig will be used for development drilling across the Tawke Field.
    Seismic activities:
    Following completion of the 3D seismic campaign completed in October 2006, a further 2D seismic acquisition campaign (77 km) was completed across the Erbil PSA area. DNO plan to carry out an additional 300 km of 2D seismic within the Dihok PSA once the winter season has ended in Q1 2007. 
    Commenting on the results Managing Director Helge Eide says:
    "With the significant progress that has been made on the Tawke Early Production project, we should be ready to produce the first oil from Tawke during first quarter of next year. Achieving this important near term target will mark another important milestone to KRG and DNO."
    28 December 2006