DNO provides an update on the reserves for the Tawke field in Kurdistan, Northern Iraq.

Highlights

Based on the latest data available and initial results from the reservoir modelling studies utilizing such data, the revised estimates of the oil volumes in the Tawke field are:

The gross volumes of oil in place are ranging from 0.9 to 1.9 billion barrels with a current expected value of 1.3 billion barrels

The gross recoverable oil reserves are ranging from 150 million barrels to 370 million barrels, with a current expected value of 230 million barrels. Improved oil recovery (IOR) methods have not been applied for in these estimates and IOR methods may contribute to a substantial upside to these reserve figures.

When production and export of oil at full capacity of the Tawke facilities will take place, the understanding of the reservoir behaviour will improve, forming a stronger basis for confirming the full potential and further development of the Tawke field.

Brief history

Since the Tawke # 1 discovery well was drilled on the Tawke structure in the spring of 2006 a substantial amount of additional geological and reservoir information has become available. The observations and analysis to date confirm that the Tawke structure is of substantial size, with good pressure communication across the field. The flow rates achieved from well testing also suggest very good reservoir properties

The data base established so far is based on 9 exploration and appraisal/development wells, 3-D seismic across the structure, and data acquired during test production. Test production commenced in June 2007 from the upper reservoir, and was shifted to the lower reservoir during October. During test production commencing in June 2007 the average flow rate to date is approximately 6,000 bopd from two wells only. The oil has been delivered exclusively to the domestic market, and the produced volumes have been limited by the demand in the local market.

Description of the Tawke field

The Tawke field covers an area of approximately 25 km by 3 km as defined by 3-D seismic and the 9 wells drilled to date. Two oil bearing reservoir horizons have been encountered. The upper reservoir horizon is of Tertiary age and the lower reservoir horizon is of Cretaceous age. The main hydrocarbon accumulation is assumed to be in the Cretaceous reservoir.

The oil column is presently interpreted to be approximately 180 m in the Tertiary reservoir, and approximately 900 m in the Cretaceous reservoir. The oil water contacts have been estimated within a range of +/- 20 m.

The two reservoir horizons in Tawke comprise of fracture carbonates systems, where the oil is trapped both in fractures and in the pore volume in the rock matrix. The fractures and the matrix pore volumes have been dealt with independently with respect to estimating the oil volume in place as well as recoverable oil volumes.

Both through the initial tests in the wells as well as during test production excellent production characteristics have been documented in both reservoir horizons present in Tawke. Based on the initial test results from the 8 production wells drilled to date, the current cumulative initial maximum well capacity of the Tawke field is 90,000 bopd Both reservoirs contain oil of very low gas oil ratio (GOR), with API gravities between 25 and 27 degrees in the Tertiary and Cretaceous reservoir sections respectively. To date no water has been produced during the test production

Revised estimates of oil volumes in Tawke

Based on the oil columns described above, the oil in place volumes have been estimated to be in the range of 0.9 to 1.9 billion barrels with an expected value of 1.3 billion barrels. The uncertainty range is mainly dictated by the matrix porosity, net/gross ratio and particularly the estimated fracture density.

Using the results from the initial reservoir modelling and simulation studies utilizing the latest available data, the recoverable reserves have so far been estimated to be in the range of 150 to 370 million barrels, with a current expected value of 230 million barrels.

The basis for these estimates is the current production capacity at the central processing facilities of 50.000 bopd, with upgrades as required. It has been further assumed that any water produced will be re-injected. Improved oil recovery (IOR) methods have not been applied in the modelling work to date, and IOR method may contribute to a substantial upside to these reserve figures.

The main parameters affecting the recoverable volumes quoted above (not considering any IOR methods) are fracture density in particular as well as matrix porosity and - permeability; hence the contributing volumes are from both the fractures and the matrix itself.

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