Arbitration award received

DNO Iraq AS, a subsidiary of DNO International ASA (DNO), is involved in
arbitration proceedings related to certain third party interests in The
Kurdistan Region of Iraq. The London Court of International Arbitration has
disclosed the award in these proceedings.

The award, which is conditional, does not specify any figure of damages to be
paid by DNO, but rather the method and assumptions to be applied by the parties
to calculate and agree on a final figure. Due to the complexity of the
calculation model, some time is needed in order to agree on a final figure. Our
very early and preliminary estimates indicate the damages to be in the range of
USD 55-75 million.

DNO recorded a provision for arbitration claims of USD 12 million in its year-
end accounts for 2009, in line with the Company's submission based on third
party experts used by DNO. The claimants' submission for damages was USD 144
million.

"We note that this award deviates from both the claimants' and our submissions.
Assuming a final award in line with our preliminary calculations, we are able to
fully cover the estimated range of damages from our cash reserves. Furthermore,
this should not have any effect on our current investment plan which includes
the drilling of at least five exploration wells and completion of a new
development in Yemen", says Helge Eide, Managing Director and President of DNO
International ASA.

Based on the preliminary calculation, the award is expected to imply additional
loss of USD 45-65 million in the Company's accounts for the third quarter of
2010. This will affect the Company's income statement and equity, but DNO will
remain in full compliance with its financial covenants.

DNO reported a total cash position of NOK 822 million for the second quarter of
2010. As a result of increased production and cash flow, the Company's cash
position has increased to around NOK 940 million (USD 160 million) by end of the
third quarter. Consequently, the Company is in a position to fully cover the
estimated range of damages from its cash reserves.


Oslo, 6 October 2010

DNO International ASA
Corporate Communications

Contacts:

Media: Financial market:
Communication Director Tom Bratlie CFO Haakon Sandborg
Phone: +47 905 21 904 Phone: +47 23 23 84 80



Background:
DNO Iraq AS, a subsidiary of DNO International ASA (DNO) is involved in
arbitration proceedings related to certain claimed third party interests in The
Kurdistan Region of Iraq, where DNO Iraq AS has entered into Production Sharing
Contracts (PSC) with the Kurdistan Regional Government.

Following a review of the PSCs completed in March 2008, the third parties were
not approved by the Kurdistan authorities to be part of nor have any rights in
the PSC. Hence, DNO has rejected the basis for any such claims. However, in the
first award the arbitrator ruled that the claimants had a right to seek
compensatory damages from DNO Iraq AS.

The award referred to in this release was made on 29 September 2010, and
communicated to the parties on 1 October.


This information is subject of the disclosure requirements acc. to §5-12 vphl
(Norwegian Securities Trading Act)


[HUG#1449377]








This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.

Source: DNO International ASA via Thomson Reuters ONE


Unternehmen: DNO International ASA - ISIN: NO0003921009