14th Jul 2015 07:04
LONDON (Alliance News) - Dragon Oil PLC on Tuesday reported a large rise in production and sales during the first-half of 2015 and said it broke through its 100,000 barrel per day target in June, but also said capital expenditure for the full-year will be at the upper end of its guidance.
The oil and gas company that operates the Cheleken Contract Area offshore Turkmenistan said the average gross production rate in the first-half of 2015 was 92,060 barrels of oil per day, a large rise from 73,440 barrels of oil per day a year earlier.
In June, the production rate averaged 98,890 barrels of oil per day compared to 76,100 barrels per day, but on June 9 the company broke through its target, producing 100,658 barrels of oil.
"At the beginning of June 2015 we achieved a production level of 100,658 barrels of oil per day. It is a milestone for Dragon Oil and a testament to the hard work and dedication of our talented people," said Chief Executive Abdul Al Khalifa.
"We are aiming to maintain the average daily gross production at around 100,000 barrels of oil per day for the remainder of the year and sustaining this plateau thereafter for a minimum of five years," he added.
The rise in production came from the addition of six new production wells in the first-half and because Dragon's production entitlement, which is calculated based on fiscal terms of the production sharing agreement, operating and development expenditure in the period and the realised crude oil price, rising to 68% from 52% a year earlier.
Sales totalled 10.2 million barrels in the first half, almost double the 5.2 million barrels sold a year earlier. Dragon exported 87% of its production through Baku, Azerbaijan in the period with the rest being exported through Makhachkala in Russia.
That came after the company reached a one-year agreement in December with two buyers for all of its anticipated entitlement export production in 2015 through the two routes. The current contracts are valid until the end of 2015.
However the fall in oil prices took its toll as expected, with Dragon achieving an average price of USD44 per barrel compared to USD92 per barrel a year earlier.
Capital expenditure in the first-half totalled USD313 million, flat year-on-year, and Dragon reported a net cash balance of USD1.85 billion, which excludes abandonment and decommissioning funds. Approximately 47% of expenditure was attributable to infrastructure with 51% spent on development and appraisal drilling, and the balance was spent on exploration assets.
Capital expenditure for the whole of 2015 is expected to come in at the upper end of the company's guidance of USD500 to USD600 million, whilst exploration expenditure will total between USD50 to USD100 million.
Dragon also said an independent committee has evaluated the 750.0 pence per Dragon share takeover offer from Emirates National Oil Co Ltd LLC announced in June. The committee has said the deal "is in the best interests of Dragon Oil minority shareholders as a whole."
That offer currently remains open until the end of July.
By Joshua Warner; [email protected]; @JoshAlliance
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