Yemen Drilling and Production Update

New production well at the Tasour Field
The Tasour #18 infill / development well has been drilled to a total depth of 2,103 meters and completed as a Qishn oil producer. The well encountered three upper Qishn sands (S1-A, S1-B and S1-C) in a structurally high position above the original field oil water contact.  The well has been initially completed and placed on production as a Qishn S-1C oil producer with an initial production rate of some 3 000 BOPD (1 190 BOPD net to DNO, pre-tax) of oil and ca.1 550 BOPD of water.  The remaining zones (S-1B and the main Tasour field S1-A) will be completed in the future, to optimize field production and recoveries. The drilling rig is scheduled to move to Block 43 to drill Nabrajah # 7, which will be a dedicated Qishn oil producer. Thereafter the rig will move to Block 53 to drill two wells on the Sharyoof Field before returning to Block 32 for additional drilling in the 4th quarter of 2005.
A second drilling rig commenced drilling Tasour #19 on June 8th and is currently drilling.  Tasour #19 will appraise the central southwest portion of the Tasour field and evaluate a potential basement exploration prospect located south of the main Tasour field.  The basement prospect was identified on the 3-D seismic shot over the Tasour field in 2004 and is analogous to recent Basement oil discoveries in the Masila basin (Canadian Nexen's Block 14, Total's Block 10 and recently DNO's Block 43.  It is expected that Tasour #19 will be drilled and evaluated by the end of July. The rig will then move to Block 43 to drill 4 back-to-back Nabrajah Basement wells.
The Tasour field is currently producing ca. 16,350 BOPD (6 490 BOPD net to DNO, pre-tax)) with the addition of Tasour #18.
DNO is holding a 38.95 % Working Interest (WI) and is the Operator of Block 32.
Block 72 Update
DNO ASA (Operator at 34% WI), TG Holdings Yemen Inc. (33% WI) and Ansan Wikfs (Hadramaut) Limited (33% WI) ("Block 72 Joint Venture Group") were selected as the successful bidders for Block 72 in the Yemen International Bid Round for Exploration and Production of Hydrocarbons. The Block 72 Production Sharing Agreement ("PSA") was ratified by the Yemen parliament (June18th, 2005).  The PSA will become law, following the Presidential decree that is expected within the next two weeks.  
Block 72 encompasses 1,822 square kilometers (approximately 450,234 acres) and is located in the western Masila Basin adjacent to the billion barrel Canadian Nexen Masila Block. The Block 72 Joint Venture Group plans to carry out a seismic acquisition program and the drilling of two exploration wells during the first exploration period of thirty months. It is anticipated that 3-D seismic will be acquired during late 2005/ early 2006, with drilling commencing in 2006.  Any discoveries made on Block 72 would follow a similar development program to Block 32's whereby a separate oil processing facility and a pipeline would be constructed to connect to the Nexen export pipeline.