DNO ASA - Yemen Update

("DNO" or "the Company")
DNO is pleased to announce an update on drilling and testing activities in the Republic of Yemen:
The Tasour # 23ST exploration well was drilled to a total depth of 3,139 meters and suspended as a potential upper Naifa oil well. Approximately 200 barrels of 27 API oil and 457 barrels of water were recovered from a 10.5 meter perforated interval in the upper Naifa carbonate. The production test was terminated early (17 hours) when the large electrical submersible pump ("ESP") was over-heated.
Well stimulation and horizontal drilling have led to the successful exploitation of the upper Naifa carbonates on other blocks in Yemen.  Therefore the initial result on Tasour 23ST is very encouraging. To evaluate the new discovery, DNO is preparing to stimulate the zone with acid, install a smaller ESP and place the well on a long term production test. It is expected that the production test will commence early in 2007, with oil trucked to the Tasour facility for treatment and export. 
The Tasour # 23ST exploration well targeted prospects in the Naifa carbonates and fractured Basement. The Tasour # 23 well commenced drilling on September 5, 2006 and encountered drilling problems at 2,586 meters. The well was subsequently plugged back to 852 meters and side tracked. The side track well reached a total depth of 3,139 meters (approximately 300 meters into the Basement) on December 7. Testing was carried out on the Basement and on two separate Naifa carbonate zones. No hydrocarbons were recovered from tests on the Basement and the lower Naifa carbonate.  The drilling rig is currently moving to Block 43 (56,67 % Working Interest) to drill an exploration prospect with the Naifa carbonates as the main target (Shaibah # 1).
A second drilling rig completed a two well service program in the Tasour field (a new water injector at Tasour # 24 and a re-completion at Tasour #10) and is scheduled to move to Block 72 (34% Working Interest) to drill Nasim #1. The Nasim # 1 exploration well is located to test prospects in the Qishn sandstones and in the Naifa carbonates and expected to commence drilling in mid January.
Block 53 (24,45 % Working Interest)
The well Hekma-1 has been drilled to a depth of 3715m in the basement, and testing is currently being undertaken. DST#1 tested open hole basement (from TD at 3715 meters to 7" shoe at 3254 meters), but no flow was achieved. DST# 2 tested Kholan sandstone (3186 - 3199mMD) through 7" liner immediately above the basement. This test gave a stable gross oil rate of 800 barrels per day. Two additional tests are planned in the well; One combined tests of  two Madbi sandstone intervals (3022 - 3030 meters and 3001 - 3013 meters), both interpreted as oil bearing from wire line logs, and one test in the Madbi carbonate (2919 - 2930 meters), which yielded good hydrocarbon shows while drilling.
Bayoot South # 1 has been drilled immediately south of Bayoot SW-1 and SW-2 to test a Madbi fan down-flank of the basement high. The current TD is at 3106,6 meters with a 7" casing set at bottom. When drilling 8 ½" hole to TD, the well started to flow oil, and heavy mud was needed to control the well. The well is now suspended awaiting supply of equipment to continue drilling and testing.
The rig utilized to drill Bayoot South # 1 will now be moved north to drill Balal # 1 which is a Qishn prospect north-east of the Sharyoof field.
The Bayoot and Hekma structures are both located on a very prospective basement / Madbi trend between the Sunah field in Block 14 some 14 km to the south east, and the Kahrir field in Block 10 some 15 km to the south west. The Sunah and Kahrir fields have proven to be the most successful basement producing fields in Yemen to date.
From the recent drilling results it is becoming clear that this area in the southern part of Block 53, contains an exciting potential. Out of 4 recent wells drilled within this area, 3 wells have proven oil. Although tests to date has not yielded production rates at levels achieved from the shallower Qishn sandstones, higher production rates could be achieved through other drilling, completion and stimulation techniques.
Commenting on the results Managing Director Helge Eide says:
"DNO's first oil production from the deeper formations in Yemen was achieved from the Nabrajah Field in Block 43. The recent drilling and testing results from the deeper formations in Block 32 and Block 53 are therefore very encouraging, confirming the potential also in other licenses held by DNO in Yemen. This forms a good basis for increased reserves and production from Yemen in the years to come, securing sustainable growth in one of DNO's core areas." 
28 December 2006