DRILLING SUMMARY

Kurdistan / Northern Iraq

Tawke wells
The Tawke # 12 well was previously drilled to the top of the Cretaceous reservoir section using one of the larger drilling rigs, and thereafter temporarily abandoned. The well was re-entered by the new carrier rig and the Cretaceous reservoir section has been now been penetrated. A total of 131 meters of cores were taken in the Cretaceous and the observations while drilling and coring confirm oil in the reservoir as expected.

The well has now been deepened into the top of the Jurassic section and oil shows have been observed while drilling. The Jurassic section represents another reservoir target which will be further evaluated within the Tawke area as well as in the other areas of the PSA’s.

The forward plan is now to test and complete the Tawke # 12 well as a Cretaceous producer. Thereafter the carrier rig will move to Tawke # 5 to undertake a re-completion of the well.

Exploration Drilling
As previously reported the two larger rigs under operations by DNO were released from the Tawke field in November 2007 after drilling Tawke # 11 and # 12 down to the top of the Cretaceous reservoir horizon. Both rigs are now drilling exploration wells in other areas of DNO’s PSA’s.

Erbil PSA Area
Drilling of the Hawler # 1 well commenced on 14 November 2007 as the first well in Erbil PSA area. As previously reported influx of oil was observed while drilling through the top of the Cretaceous reservoir horizon. Oil shows were also observed in several additional intervals in the Cretaceous as well as in the Jurassic while drilling. A 7″ liner has now been installed but retrieval of certain equipment being used to install the 7″ liner has caused some delays in the operations. An open hole test in the Jurassic just below the 7″ liner shoe is currently in preparation and will be undertaken before further deepening the well to evaluate additional potential reservoir horizons. An extensive test program will thereafter be undertaken in the well. An appraisal well will be drilled immediately after completion of Hawler # 1 subject to the testing confirms commercial flow rates of oil.

Dihok PSA Area
Drilling of the Summail Extension # 1 well commenced on 19 November 2007. The well is currently drilling at 2,710 meters. Oil shows have been observed in several levels while drilling trough the Cretaceous interval. Following a drilling break with substantial mud losses within one particular section of the Cretaceous interval a short open hole test was conducted. No hydrocarbons were produced during this short flow period. The well will now be drilled to also evaluate the Jurassic interval and the total depth of the well is expected to be approximately 4,000 meters. Once at total depth a full evaluation will be undertaken to investigate the significance of oil shows encountered in the well.The Summail Extension prospect is located in the south-western area of the Dihok PSA.

Seismic acquisition is still ongoing in the Dihok PSA, with seismic interpretation being undertaken simultaneously. This will form the basis for several exploration targets to be drilled in 2008.

All 3 rigs operated by DNO in Kurdistan / Northern Iraq are expected to be in operation throughout 2008.

YEMEN

Block 47
The Yaalen # 1 exploration well commenced drilling on 4 January 2008 and is the first exploration well drilled by DNO on this license. The well has been drilled to a depth of approximately 2,550 meters. Oil has been observed while drilling through several intervals, and oil was also retrieved from wire line fluid sampling both in the Qishn sandstone as well as in the Kohlan sandstone immediately above the Basement.

The forward plan is to drill a Basement section before temporarily abandon the well. The rig will thereafter move to Block 32 to drill one exploration well and a Godah development well before returning to Block 47.

A smaller rig currently being used for testing Bayoot SW # 4 in Block 53, will be mobilised to undertake the testing of Yaalen # 1. The testing of Yaalen # 1 is expected to commence early April.

Block 43
The Dahgah # 1 exploration well commenced drilling on 9 January 2007 and has now reached its total depth of 2,696 meters. The well did not encounter hydrocarbons in the Qishn interval, but oil shows were observed while drilling through a 27 meter thick interval in the Naifa dolomites. The significance of the oil shows is currently being evaluated by wire-line logging and fluid sampling. Decision to test the well is contingent on the results from these ongoing evaluations. Dahgah # 1 is located approximately 5 km east of the Nabrajah field.

Block 53
Drilling of Bayoot SW # 4 commenced on 18 November 2007. Oil shows were observed while drilling both in a carbonate interval in the Naifa formation just above the Basement, as well as in the fractured Basement interval. The well has been temporarily abandoned and the rig was moved to the Bayoot # 5 location, which is another Basement target within this area. A smaller drilling and work-over rig is being mobilized to undertake the testing of Bayoot SW # 4, and the carbonate reservoir in the Naifa formation will be tested before testing the fractured Basement. As previously reported Bayoot SW # 3 tested 1.600 bopd from Basement within this area, and oil from this well is transported by tanker trucks to the Sharyoof facilities. It is expected that several additional Basement wells within this area will be drilled in 2008.

Production increased by 10% in January 2008 compared to December 2007. The net entitlement production for January 2008 will be reported mid March together with February production figures.

(DNO Press Release)