DNO ASA - Revised reserve estimates on Tawke

DNO is pleased to announce an update on the reserves for the Tawke field in Kurdistan, Northern Iraq.
  • Based on the latest data available and initial results from the reservoir modelling studies utilizing such data, the revised estimates of the oil volumes in the Tawke field are:
    • The gross volumes of oil in place are ranging from 0.9 to 1.9 billion barrels with a current expected value of 1.3 billion barrels
    • The gross recoverable oil reserves are ranging from 150 million barrels to 370 million barrels, with a current expected value of 230 million barrels.
  • Improved oil recovery (IOR) methods have not been applied for in these estimates and IOR methods may contribute to a substantial upside to these reserve figures.
  • When production and export of oil at full capacity of the Tawke facilities will take place, the understanding of the reservoir behaviour will improve, forming a stronger basis for confirming the full potential and further development of the Tawke field.
Brief history
Since the Tawke # 1 discovery well was drilled on the Tawke structure in the spring of 2006 a substantial amount of additional geological and reservoir information has become available. The observations and analysis to date confirm that the Tawke structure is of substantial size, with good pressure communication across the field. The flow rates achieved from well testing also suggest very good reservoir properties
The data base established so far is based on 9 exploration and appraisal/development wells,
3-D seismic across the structure, and data acquired during test production. Test production commenced in June 2007 from the upper reservoir, and was shifted to the lower reservoir during October.
During test production commencing in June 2007 the average flow rate to date is approximately 6,000 bopd from two wells only. The oil has been delivered exclusively to the domestic market, and the produced volumes have been limited by the demand in the local market.
Description of the Tawke field
The Tawke field covers an area of approximately 25 km by 3 km as defined by 3-D seismic and the 9 wells drilled to date. Two oil bearing reservoir horizons have been encountered. The upper reservoir horizon is of Tertiary age and the lower reservoir horizon is of Cretaceous age. The main hydrocarbon accumulation is assumed to be in the Cretaceous reservoir.
The oil column is presently interpreted to be approximately 180 m in the Tertiary reservoir, and approximately 900 m in the Cretaceous reservoir. The oil water contacts have been estimated within a range of +/- 20 m.
The two reservoir horizons in Tawke comprise of fracture carbonates systems, where the oil is trapped both in fractures and in the pore volume in the rock matrix. The fractures and the matrix pore volumes have been dealt with independently with respect to estimating the oil volume in place as well as recoverable oil volumes.
Both through the initial tests in the wells as well as during test production excellent production characteristics have been documented in both reservoir horizons present in Tawke. Based on the initial test results from the 8 production wells drilled to date, the current cumulative initial maximum well capacity of the Tawke field is 90,000 bopd
Both reservoirs contain oil of very low gas oil ratio (GOR), with API gravities between 25 and 27 degrees in the Tertiary and Cretaceous reservoir sections respectively. To date no water has been produced during the test production
Revised estimates of oil volumes in Tawke
Based on the oil columns described above, the oil in place volumes have been estimated to be in the range of 0.9 to 1.9 billion barrels with an expected value of 1.3 billion barrels. The uncertainty range is mainly dictated by the matrix porosity, net/gross ratio and particularly the estimated fracture density.
Using the results from the initial reservoir modelling and simulation studies utilizing the latest available data, the recoverable reserves have so far been estimated to be in the range of 150 to 370 million barrels, with a current expected value of 230 million barrels.
The basis for these estimates is the current production capacity at the central processing facilities of 50.000 bopd, with upgrades as required. It has been further assumed that any water produced will be re-injected.
Improved oil recovery (IOR) methods have not been applied in the modelling work to date, and IOR method may contribute to a substantial upside to these reserve figures.
The main parameters affecting the recoverable volumes quoted above (not considering any IOR methods) are fracture density in particular as well as matrix porosity and - permeability; hence the contributing volumes are from both the fractures and the matrix itself.
Forward plan
Acquisition of additional data and comprehensive analysis and modelling work will continue throughout 2008 with the view to improving the understanding of the Tawke reservoir and to evaluate and confirm the full potential of the field.
Test production will continue to provide dynamic data to support further assessment of the properties and production characteristics of the reservoirs.
Detailed reservoir and production engineering studies will be undertaken during 2008 to further assess the Tawke production strategy and reserve estimates. This work will be supported by several special studies including:
  • Formation evaluation including testing of wells # 11 and 12
  • Special core analysis
  • Assessment of increased oil recovery methods, including gas injection vs. water injection and alternative well designs and well patterns
This work will aim to reduce the uncertainties in the reserves estimates, as well as targeting the upside potential through improved oil recovery methods.
However only production information and history will provide the crucial information required to reduce the uncertainties of the reserve estimates and confirm the reserves upside and associated production.
The test production has been at limited flow rates dictated by the demand in the local market. However, when DNO is in the position to produce and export oil at full capacity of the facilities, the flow rate will increase substantially and the understanding of the dynamic behaviour of the reservoir will improve. This will form a stronger basis for optimizing the further appraisal and development of the Tawke field, improving the reserve estimates, and confirming the full potential of the Tawke field.
Helge Eide, President and Managing Director comments:
"We are pleased to note that this update more than doubles the estimated reserves in Tawke. The data gathered to date and technical work undertaken by the Company have confirmed the high quality of the Tawke field."
"We remain focused on delivering additional values from the Tawke field as well as from the exploration activities currently being progressed in other areas of our licenses."
Representatives from DNO ASA will give a presentation of the revised reserve estimates for the Tawke field at 11:00 A.M. on 18 December 2007 in Felix Konferansesenter at Bryggetorget 3, Aker Brygge, Oslo.
The presentation can also be followed live on the internet, via a video webcast at www.dno.no. An archived version of the webcast will be posted on www.dno.no shortly after the presentation. The presentation will be held in English.
18 December 2007

Helge Eide, MD DNO ASA
+47 23 23 84 80
Ketil Jørgensen, Crux Communication (Norway)      
+47 930 36 866
Ben Willey, Buchanan Communications (UK)
+44 207 466 5000
Investor Relations:
Haakon Sandborg, CFO DNO ASA
+47 23 23 84 80
Robert Arnott, Advisor (UK)
+44 207 839 7764