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Monday, September 8, 2014

DNO Gets Somaliland Oil Extension

 (Wall Street Journal )- OSLO--Oslo-listed oil company DNO ASA (DNO) said Monday its production-sharing agreement in Somaliland had been extended for two years, and it is waiting for the regional government to establish an oil security unit before gathering seismic data.

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The license partners "will initiate a planned seismic acquisition program once the Government of Somaliland has put in place a planned Oil Protection Unit to support the international oil companies operating in Somaliland," said DNO.

Somaliland is currently in the process of establishing the OPU, a security unit of 420 personnel, and DNO expects the force to be operational in 2015. Somaliland, the largely self-governed region of Somalia, has been more stable than the rest of the country in recent years, but a DNO water survey team recently had to leave the Hudun area after gunshots were fired.

DNO has a 50% stake and is operator of the SL-18 license, a frontier onshore exploration block. It has completed a field survey and environmental assessment studies. DNO has previously said it expected to spend between $10 million and $20 million on its Somaliland activities.

Following the two-year extension, DNO's exploration period will end in Nov 2017.

Anglo-Turkish oil company Genel Energy PLC, which holds stakes in several licenses in Somaliland, pulled out of the autonomous region last September due to "a deteriorating security environment." The company has since been in discussions with the Somaliland government on whether to resume its activity.

Oslo-based DNO has activity across the Middle East and North Africa, including the Kurdistan region of Iraq, Yemen, Oman, the United Arab Emirates, Somaliland and Tunisia. DNO produced 39,170 barrels of oil equivalent a day in 2013.

If the security situation permits it, DNO will resume its development program in Somaliland, including the drilling of wells to provide water for local communities in the SL18 license area.

At 0741 GMT, DNO shares traded 1.3% higher at NOK19.40.
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