DNO ASA - Operations Update - Northern Iraq

Tawke operations
Following the testing of the discovery well Tawke # 1 in June 2006 a twin well, Tawke # 1A, was drilled at a location some 20 meters from the discovery well. The main objective of the twin well was to repeat the testing of the shallower reservoir sections (< 1000 meters) in open hole mode, in order to eliminate formation damage assumed to be caused during installation and  cementing of casing in the discovery well.
A maximum flow rate of approximately 5,000 barrels of oil per day was achieved during open hole testing of Tawke # 1A. This flow rate was achieved from the same reservoir interval which also tested 5,000 BOPD in Tawke # 1. Tawke # 1A will now be completed as a future oil producer.
The open hole testing of the other reservoir zones in the shallower sections in Tawke # 1A did not provide conclusive results. This could be as a result of lower productivity, formation damage caused by drilling fluids, or a combination of both. The results will be further investigated and additional testing of these intervals is planned to be undertaken in the next well, Tawke # 2. During testing of Tawke # 2 a more extensive acid stimulation and fracturing of the reservoir sections will be considered.
Tawke # 2 will be drilled as an appraisal well penetrating the shallower reservoir sections only (< 1.000 meters) and the well is located some 2 km to the west of Tawke # 1 & 1A. Following the drilling of Tawke # 2 appraisal well, the plan is to drill an exploration well within the eastern part of the Tawke area.
As part of the program to assess the full oil potential of the Tawke area, DNO is currently performing a 3D seismic survey across the area. This will serve as an important input to the location of future production and appraisal / exploration wells within the area.
The two deeper reservoir zones (> 2000 meters) which were penetrated in Tawke # 1 were not penetrated in Tawke #1A. These reservoir zones have been preserved behind casing in Tawke # 1 and will be tested at a later stage.
In order to accelerate drilling of additional production wells into the shallower reservoir sections a smaller carrier rig is expected to be mobilized into the PSA area during the fourth quarter of 2006. This rig may also be used to test the deeper reservoir sections in Tawke # 1. At completion of the additional testing of Tawke # 1, the well be completed as a future oil producer.
Tawke Early Production Plan
The reservoir interval which tested 5,000 BOPD in Tawke # 1 and 1A, forms the basis for the Early Production Plan for the Tawke oil discovery. The development plan is now nearing completion and all major facilities are secured. It is expected that the development plan will be finalized and presented to our partner Kurdistan Regional Government (KRG) in the near future. First oil production from Tawke could commence during 1st Quarter 2007.
Exploration in other areas of the PSA's
A second drilling rig was mobilized into the PSA area during July. The rig is currently drilling the first well at the Khanke prospect (Khanke # 1). The well is expected to reach its total planned drilling depth of 3.500 meters within the next 30 days. The next well location is contingent on the results from Khanke # 1 and DNO has identified several additional exploration prospects within the PSA area.
Plans are also being made to continue with 2D seismic acquisition in areas of the PSA's that are presently unexplored. This work program is scheduled to commence after the 3D seismic acquisition which is due to be completed in October.
Commenting on the results Managing Director Helge Eide says:
"We are very pleased with the progress of our operations in Kurdistan to date. Achieving our near term target to produce the first oil from Tawke during first quarter of next year will mark another important milestone to KRG and DNO.
With our increased rig capacity we will also be in a position to accelerate our drilling activities with the view to assess the full potential of the Tawke area as well as exploring additional prospective structures within the PSA area."
September 18, 2006

Contact: Helge Eide
Managing Director.               
Telephone: (+47) 23 23 84 80