DNO International ASA - Preliminary comments to...

DNO has over the last years followed a strategy which has made the
company prepared for a possible downturn in the oil & gas industry.
Activities have been focused on low cost, high potential areas,
avoiding long-term future capital commitments. The company is ready
to increase production from substantial reserves at low cost, without
further investments.


In line with this strategy, DNO has previously secured long-term bond
financing mainly maturing in 2012.

In order to adjust to the recent oil price and the equity markets DNO
will record certain non-cash impairments in its Q4 results.


INVESTMENT IN ASSOCIATE - DET NORSKE OLJESELSKAP ASA

In 2007, DNO reduced its ownership in Det norske oljeselskap ASA
("DETNOR") to 36.9%. Through several transactions, DNO received NOK
650 million in cash and increased its balance sheet equity by
approximately NOK 1,5 billion. DETNOR shares has since been accounted
for using the equity method, where DNO's share of profit or loss is
reflected as financial income or expense with a corresponding
adjustment of the carrying value in the balance sheet.

Assessing the book value of DETNOR shares at year-end 2008, DNO has
applied the principle stated in IAS 39.61, whereby a prolonged or
significant decline in the fair value of an investment in an equity
instrument below its cost is objective evidence of non-cash
impairment.

As reported to the market, the performance of DETNOR has not been
according to DNO's expectations. The market share price for DETNOR at
31 December 2008 was significantly below DNO's book value. DNO will
consequently have to record a non-cash net impairment loss (net after
DNO's share of the Q4 profits) of approximately NOK 621 million in
the fourth quarter. The non-cash impairment loss on the DETNOR
investment may be reversed in subsequent periods based on share price
recovery.


OIL AND GAS ASSETS

While IFRS requires impairment to be tested on each cash generating
unit, the total estimated fair value of DNO's Yemen licenses is close
to book values. However, on a field basis a non-cash impairment loss
of approximately NOK 200 million is required for the assets in Block
43 in Yemen, based on the recent oil price.


AVAILABLE-FOR-SALE (AFS) SHARES

A non-cash impairment loss of NOK 31 million will be recorded for AFS
shares in the fourth quarter based on the market share prices as at
31 December 2008.


DEFERRED TAX ASSET

DNO has available tax losses of approximately NOK 1 billion in the
parent company which can be carried forward indefinitely under
Norwegian tax rules. Based on an assessment of the deferred tax asset
at year-end, DNO will write down the deferred tax asset to
approximately NOK 250 million and consequently record an estimated
non-cash write-down of approximately NOK 70 million in the fourth
quarter.


EFFECTS ON DNO'S Q4 RESULTS

The above impairment assessments have been undertaken as required by
IFRS accounting standards resulting in total non-cash impairment
losses and write-downs of approximately NOK 920 million in the fourth
quarter.


DNO International ASA
13 February, 2009



Contact:

Media:
Helge Eide, MD DNO International ASA   Telephone:    [phone]
Ketil Jørgensen, Crux Communication    Telephone     [phone]
(Norway)
Ben Willey, Buchanan Communications    Telephone:    [phone]
(UK)

Investor Relations:
Haakon Sandborg, CFO DNO International Telephone:    [phone]
ASA


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