11th Jul 2014 07:46
LONDON (Alliance News) - Dragon Oil PLC Friday said its production rates were slightly down in its first half compared to last year, and it got bad news from initial flow rates at its Zhdanov 21/101 well in the Dzhygalybeg field, Turkmenistan.
The oil and gas exploration and production company said its average production rates in the first half ended June 30 were down slightly to 73,440 barrels of oil per day from 73,600 barrels previously.
However, Dragon Oil said its average June production rate was 76,100 barrels, up on 75,800 barrels in June 2013, and the production rate on July 9 was 78,031 barrels. It said most of its planned production increase for 2014 will come from new wells in the second half of the year.
As such, the company said it expects between 5% and 10% production growth in 2014, with an exit rate at between 87,000 and 90,000 barrels of oil per day in 2014, as the company moves towards its planned 2015 exit rate of 100,000 barrels of oil per day.
Dragon Oil said its Zhdanov 21/101 well in Turkmenistan was tested across limited reservoir intervals and had a lower than expected initial flow rate at 425 barrels of oil per day with high water content. The company said that due to well bore stability issues in the well it has decided to suspend the well and sidetrack it in the future.
"Due to drilling difficulties, we tested only the upper part of the reservoir. While the results of the initial flow rate from the well are below our expectations, it would be premature to draw conclusions about the potential of the Dzhygalybeg field," Chief Executive Abdul Jaleel Al Khalifa said in a statement.
The news comes days after the company's partner in a prospective gas license offshore the Philippines had decided to plug and abandon an exploration well at the site after failing to find enough gas to warrant further testing.
On Monday, Dragon Oil had said Nido Petroleum Philippines Ltd, its partner on Service Contract 63 in the north-west Palawan Basin, offshore the Philippines, had drilled the Baragatan-1A well down to a depth of 2,681 meters and hit the reservoir it was targeting. However, the reservoir units contain low gas saturations which did not warrant further evaluation or testing.
"While the Barragatan-1A exploration well in the Philippines did not discover commercial hydrocarbons, its results and data from drilling provide us with information, which we will integrate into the regional geological picture and use to assess our future interest in the block," Al Khalifa added on Friday.
Dragon Oil shares were down 0.5% to 581.00 pence on Friday.
By Tom McIvor; [email protected]; @TomMcIvor1
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