In December 2007, DNO completed the combination of its Norwegian subsidiary Det Norske Oljeselskap ASA and Pertra ASA, to form DETNOR, Norway`s second largest oil company in terms of operated licenses.

The market capitalization of the new DETNOR was about NOK 4.8 billion or NOK 72 per share. Investors were invited to purchase shares for this share price for a total amount of NOK 650 million. Since then the market value of DETNOR has declined to about NOK 1.7 billion or NOK 25-27 per share, due to the fall in commodity prices, the worsening economic and financial environment but also market concern over the profitability of certain investment projects pursued by DETNOR.

DNO, DETNOR's major shareholder shares this concern, particularly on the Frøy Field, where it does not support the currently proposed development and cost scenarios. DNO encourages DETNOR and their 50% partner of the Frøy License, Premier Oil Ltd, to find more cost effective and better solutions for the Frøy field.

With a strong cash position of about NOK 2 billion in DETNOR, other license investment opportunities should also be considered. DETNOR has strategic positions established in the areas around Varg, Jotun and Draupne for fast track developments. DETNOR's likely developments and discoveries under evaluation amounts to 59MMboe, and prospects targeted in the next two years contain risked potential resources of 226 MMboe.

In DNO's view, DETNOR is currently trading at a significant discount to the underlying value of the company's assets, and does not reflect the true potential of the company. DNO has received several requests for DNO's DETNOR shares at the current market price. DNO has appointed Scotia Capital Inc. as its Financial Advisor to assist with the evaluation of strategic alternatives with respect to its 36.9% shareholding in DETNOR.

Tags: DNO International