Shares in DNO jumped by as much as 5.6 per cent in early trade as investors cheered plans to launch production in the first quarter of 2007 despite Iraq's sectarian violence and uncertainties over rights to tap its oil riches.
DNO said the Tawke 2 well in Kurdish-controlled northern Iraq has tested 3,840 barrels of oil per day, confirming a western extension of its Tawke oil discovery.
'Preliminary results from the well indicate increased reserves,' DNO said in a statement.
DNO chief executive Helge Eide said the company would start production at two of its three wells in the Tawke discovery.
'We are now (planning to) start two of the three wells, so it (daily production) would not be far from 10,000 barrels, but we will not say anything exact now,' Eide said.
DNO also said it was in a process of finalising an agreement with the Kurdistan Regional Government to increase its working interest in the production sharing agreement by 15 percentage points to 55 per cent.
In return for the bigger stake, DNO would provide all of the funding of the project costs, the company said.
DNO, whose main production operations are in Yemen, has a market capitalisation of around $1.8 billion.
'The results from Tawke 2 are very encouraging and confirm the robustness of the Tawke development,' Eide said in a statement.
'We are on schedule to achieve our important near term target to produce the first oil from Tawke during the first quarter of next year,' he said.(Source)AlSabah