DNO in merger talks with RAK Petroleum

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RAK Petroleum Public Company Limited, (RAK Petroleum) and Norway's DNO International ASA (DNO) signed a heads of agreement to merge RAK Petroleum's Middle East and North Africa (MENA) operating subsidiaries into DNO in exchange for DNO shares to be issued to RAK Petroleum.

It is intended that the transaction will be structured as a merger of two Norwegian subsidiaries of DNO and RAK Petroleum in accordance with Chapter 13 of the Norwegian Public Companies Act.

The merger terms were proposed by DNO management and endorsed by the boards of directors of both companies recently, with the RAK Petroleum directors of DNO abstaining from discussion and voting during the DNO deliberations.

Definitive agreements, once reached, will be presented to the shareholders of DNO and RAK Petroleum at separate extraordinary general meetings for final approval.

"There is a compelling logic in combining the DNO and RAK Petroleum operating assets to build a first rank independent MENA upstream operator," said Bijan Mossavar-Rahmani, Chairman of the Board of Directors and Chief Executive Officer of RAK Petroleum Public Company Limited.

Mr. Mossavar-Rahmani was also voted in as Chairman of the Board of DNO at the June 9, 2011 annual shareholders' meeting of that company.

"The opportunities for growth for MENA oil and gas companies with regional experience, strong assets and geographic diversity have never been better," Rahmani added.

The headquarters of the enlarged company will remain in Oslo, Norway; operations offices will be located in the Kurdistan Region of Iraq, Yemen, the United Arab Emirates, Tunisia and Oman.

DNO is considering listing the merged company on the London Stock Exchange in addition to the Oslo listing. A listing in London is expected to contribute to extended coverage of the company's shares, attract interest from a broader range of MENA focused investors and provide a solid platform for follow on merger and acquisition activity.

It is expected that, on merger closing, RAK Petroleum will hold a total ownership interest in DNO of approximately 40 per cent. RAK Petroleum currently holds a 30 per cent share in DNO.

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