17th Sep 2007 12:50
Dragon Oil PLC17 September 2007 17 September 2007 DRAGON OIL PLC ('Dragon Oil' or 'Company') 2007 INTERIM RESULTS Dragon Oil, an upstream oil and gas development and production company, todayannounced its interim results for the period ended 30 June 2007. The Company'sprincipal producing asset is in the Cheleken Contract Area, in the easternsection of the Caspian Sea, offshore Turkmenistan. SUMMARY RESULTS 1H 2007 1H 2006 ChangeTurnover US$213.2 million US$143.6 million +48.5%Operating profit US$136.0 million US$95.3 million +42.7%Profit after tax US$114.9 million US$80.8 million +42.2%Net cash generated from operating activities US$123.5 million US$99.3 million +24.4%Basic earnings per share 22.51 US Cents 15.83 US Cents +42.2% HIGHLIGHTS • Operating profit for the period of US$136.0 million (1H 2006: US$95.3 million) , a 43% improvement over the corresponding period in 2006. • Average gross production was 52% higher during the period at 28,321 barrels of oil per day ('bopd') (1H 2006: 18,576 bopd), of which 21,062 bopd (1H 2006: 13,444 bopd) was attributable to the Company. • Net cash generated from operating activities of US$123.5 million, a 24% improvement over 1H 2006. • Capital additions of US$110.8 million. • Cash and bank balance of US$312.1 million and no debt, as at 30 June 2007. • Four wells completed successfully in the first half of the year. • Infrastructure development programme progressing, with the 50,000 bopd processing facility, new in-field sub-sea pipelines and the first phase of the export jetty upgrade commissioned. RECENT OPERATIONS AND OUTLOOK • Since 30 June 2007, the Iran Khazar jack-up drilling rig has completedthe drilling of two further development wells, Dzheitune (Lam) A/121 andDzheitune (Lam) A/122, both from the Dzheitune (Lam) A platform. WellDzheitune (Lam) A/121 has been producing since July and well Dzheitune (Lam) A/122 is expected to be online shortly. • The CIS-1 platform-based drilling rig is due to spud its first wellshortly. This will be another development well, designed to build on thepositive results seen in earlier wells from the Dzheitune (Lam) 22 productionplatform. • Workover operations have been completed on the Dzheitune (Lam) 10platform and the workover unit will be utilised to plug and abandon wellDzheitune (Lam) 16 on the Dzheitune (Lam) 16 platform. • Numerous infrastructure development projects will be initiated duringthe second half of 2007, including major projects such as the new maintrunkline, additional production platforms and infield pipelines and theexpansion of the onshore processing facility. Mr. Hussain M. Sultan, Chairman & Chief Executive, commented: "I am pleased to report a strong first half year 2007, both operationally andfinancially. Profit has increased substantially by comparison to the sameperiod last year and this is founded, not only on the back of a continuingstrong oil price, but more importantly on our greatly-increased productionfigures. The increase in production - both in terms of average figures and ofpeak production - represents a marked step-up for the Company. "There were also notable drilling successes during the first six months of theyear. Four wells were successfully completed in the first half of this year,with an additional two development wells having been completed since 30 June.The results from the recent wells, A/119, 28/120 and A/121, are especiallyencouraging as these wells have been performing better than expected. The CIS-1rig will spud its first well shortly. By deploying two rigs at the same time,this will enable us to accelerate our field development programme significantly,as was clearly reflected in the results from the simultaneous operation of thetwo rigs in the first quarter of this year. "Capital expenditure in the first half of the year has been lower than plannedas a result of delays in commencement of some key projects and due to thedelayed mobilisation of the platform-based rigs. We expect to see expenditureaccelerate in the latter half of this year, not least because several majorprojects should kick off during the coming months. "We are continuing our discussions on the gas monetisation options with theTurkmenistan Government. At the same time, we are reviewing opportunities fordiversification of our asset portfolio by investment in additional acreageelsewhere and we anticipate that this will bear fruit in the near future." Enquiries: Dragon Oil plc (+971 4 305 3600) Citigate Dewe Rogerson (+44 20 7638 9571) Hussain M. Sultan, Chairman & Chief Executive Martin JacksonOfficer George Cazenove CHAIRMAN'S STATEMENT I am pleased to report strong operational and financial performance for thefirst six months of 2007. Operating Performance Total field production from the Cheleken Contract Area, for 1H 2007 was 5.1million barrels of oil (1H 2006: 3.4 million barrels) and the average grossproduction for the half-year was 28,321 bopd (1H 2006: 18,576 bopd), with 21,062bopd (1H 2006: 13,444 bopd) attributable to Dragon Oil. Barrels of oil sold during 1H 2007 were 3.6 million (1H 2006: 2.3 millionbarrels), of which 3.3 million barrels (1H 2006: 1.8 million barrels) were soldthrough Neka in Iran, using the Iranian swap agreement, and the remainder wassold through Baku, Azerbaijan. Dragon Oil had hedges in place at 30 June 2007 covering 2.4 million barrels of2007 production and 3.8 million barrels of 2008 production on a zero cost basis,by using collars. The average floor per barrel for the 2007 production collaris US$45 and the average ceiling is US$86. The average floor price per barrelfor the 2008 production collars is US$45 and the average ceiling is US$102. Four wells were drilled and completed up to 30 June 2007. Using the Iran Khazarjack-up drilling rig, Dragon Oil drilled two development wells, Dzheitune (Lam)21/117 (flow rate - 2,223 bopd) and Dzheitune (Lam) A/119 (flow rate - 3,100bopd). Using the Astra jack-up drilling rig, the Company drilled a developmentwell, Dzheitune (Lam) 13/118 (flow rate - 1,525 bopd) and the Company's firstwell on the Dzheitune (Lam) West structure, Dzheitune (Lam) 28/120 (flow rate -3,014 bopd). Since the half-year ended, development well Dzheitune (Lam) A/121was drilled using the Iran Khazar rig and tested at a flow rate of 2,930 bopdfrom the short and long strings. In addition, five wells have been worked over in the current year to date.Workovers were carried out on wells 10/56, 10/53, 10/54, 10/51 and 10/10, allundertaken on the Dzheitune (Lam) 10 platform. The workovers addedapproximately 1,000 bopd of incremental production. Financial Review • Profit after tax of US$114.9 million in 1H 2007 was 42% higher than the corresponding period (1H 2006: US$ 80.8 million), mainly reflecting a 52% increase in sales volumes and continuing strong oil prices. • Depletion charge for the period was US$42.4 million (1H 2006: US$27.1 million). The increased charge is attributable to the comparatively higher production during 1H 2007. • Net cash generated from operating activities in 1H 2007 of US$123.5 million was 24% higher than for the corresponding period last year. • Basic earnings per share of 22.51 US Cents were 42% higher than the corresponding period last year (1H 2006: 15.83 US Cents). • Capital expenditure in the first six months of the current year was US$110.8 million, a 68% increase compared to the corresponding period last year (1H 2006: US$66.0 million). Expenditure in the current year comprised US$76 million on drilling and workover activities and US$35 million on infrastructure projects. Operational Outlook A further development well, Dzheitune (Lam) A/122, is being completed by theIran Khazar rig and the Company will release the results of the well shortly,once the perforating and testing phase of operations has been completed. In addition, the CIS-1 rig is due to spud its first well shortly from theDzheitune (Lam) 22 platform. The Company is also in the process of refurbishingand deploying its own platform-based rig, Rig 40. Refurbishment of Rig 40 hasstarted and it is planned to spud the first well using this rig during 2008. During the remainder of 2007, Dragon Oil will continue with its engineeringworks and infrastructure development programme. There are several majorprojects which the Company will initiate in the coming months, including newproduction platforms, an offshore trunkline, additional infield pipelines andexpansion of the capacity of the onshore processing facility. In addition, phasetwo of the expansion of the export jetty has started and is scheduled forcompletion during 2008. As advised in May, the Company has been working to complete a full set ofreservoir maps and will work with external consultants on the major exercise ofsubsurface (static and dynamic) reservoir modelling. The results of themodelling efforts are expected in 2008 and will be used as the basis for arecertification of the hydrocarbon recoverable reserves. Hussain M. SultanChairman and Chief Executive OfficerDragon Oil plc Notes: (1) Dragon Oil is an international oil and gas development and productioncompany, and its principal producing asset is in the Cheleken Contract Area, inthe eastern section of the Caspian Sea, offshore Turkmenistan. Dragon Oil islisted on the London Stock Exchange and the Irish Stock Exchange ("DGO.") (2) Dragon Oil (Turkmenistan) Ltd., a wholly owned subsidiary of Dragon Oilplc, holds a 100% interest in, and is the operator for, a 25-year base term ofthe Production Sharing Agreement ("PSA") for the Cheleken Contract Area.Development of the two oil producing fields, Dzheitune (Lam) and Dzhygalybeg(Zhdanov) in the Contract Area commenced in May 2000. Dragon Oil has anexclusive right to negotiate an extension to the PSA for a further period of notless than 10 years. (3) This interim financial report may contain forward-looking statementsconcerning the financial condition and results of operations of Dragon Oil.Forward-looking statements are statements of future expectations that are basedon management's current expectations and assumptions and involve known andunknown risks and uncertainties that could cause actual results, performance orevents to differ materially from those expressed or implied in these statements.No assurances can be given as to future results, levels of activity andachievements and actual results, levels of activity and achievements may differmaterially from those expressed or implied by any forward-looking statementscontained in this report. Dragon Oil does not undertake any obligation topublicly update or revise any forward-looking statement as a result of newinformation, future events or other information. (4) For further information on Dragon Oil see www.dragonoil.com Interim consolidated income statement Unaudited Unaudited Audited 6 months ended 6 months ended Year ended Note 30 June 30 June 31 December 2007 2006 2006 US$'000 US$'000 US$'000 Revenue 5 213,165 143,576 320,061 Cost of salesOperating and production costs (27,091) (17,821) (40,667)Depletion (42,388) (27,059) (61,348) ----------------- ----------------- ---------------Gross profit 143,686 98,696 218,046 Administrative expenses (7,791) (4,473) (6,353)Other income 95 1,059 528 ----------------- ----------------- ---------------Operating profit 135,990 95,282 212,221 Finance costs (46) (1,003) (1,107)Finance income 7,978 6,217 13,107 ----------------- ----------------- ---------------Profit before income tax 143,922 100,496 224,221 Income tax expense 11 (28,997) (19,732) (43,745) ----------------- ----------------- --------------Profit for the period 114,925 80,764 180,476 ======== ======== ======== Earnings per share Cents Cents Cents per share per share per share 35.37c Basic 7 22.51c 15.83c Diluted 7 22.45c 15.76c 35.25c ======== ======== ======== The notes on pages 9 to 15 form an integral part of the financial information. Interim consolidated balance sheet Unaudited Unaudited Audited 30 June 30 June 31 December Note 2007 2006 2006 US$'000 US$'000 US$'000ASSETSNon-current assetsProperty, plant and equipment 8 581,250 437,643 512,843 ------------------- ------------------- ------------------- Current assetsInventories 57,455 14,103 47,016Trade and other receivables 9 48,978 30,746 37,680Cash at bank and in hand 10 312,051 265,778 296,208 ------------------- ------------------- ---------------Total current assets 418,484 310,627 380,904 ------------------- ------------------- ---------------Total assets 999,734 748,270 893,747 ======== ======== ========EQUITYCapital and reservesattributable to the equityshareholders of the CompanyShare capital 12 80,060 79,937 79,969Share premium 12 217,975 216,928 216,942Capital redemption reserve 77,150 77,150 77,150Other reserve 3,201 2,714 2,909Retained earnings 479,889 265,252 364,964 ------------------- ------------------- ---------------Total equity 858,275 641,981 741,934 ------------------- ------------------- ---------------LIABILITIESNon-current liabilitiesProvision for deferred income 11 56,190 49,833 51,246tax ------------------- ------------------- --------------- Current liabilitiesTrade and other payables 13 61,216 38,929 60,440Current income tax liability 11 24,053 17,527 40,127 ------------------- ------------------- ---------------Total current liabilities 85,269 56,456 100,5677 ------------------- ------------------- ---------------Total liabilities 141,459 106,289 151,813 ------------------- ------------------- ---------------Total equity and liabilities 999,734 748,270 893,747 ======== ======== ======== The notes on pages 9 to 15 form an integral part of the financial information. Interim consolidated statement of changes in shareholders' equity (unaudited) Capital Share Share redemption Other Retained capital premium reserve Reserve earnings Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 At 1January 79,937 216,928 77,150 2,509 184,488 561,0122006 Profitfor the - - - - 80,764 80,764period Employeeshareoptionscheme: - valueofservices - - - 205 - 205provided --------------- --------------- --------------- --------------- --------------- ---------------At 30 June 79,937 216,928 77,150 2,714 265,252 641,9812006 Sharesissuedduring 32 14 - - - 46theperiod Profitfor the - - - - 99,712 99,712period Employeeshareoptionscheme: - valueofservices - - - 195 - 195provided --------------- --------------- --------------- --------------- --------------- ---------------At 31December 79,969 216,942 77,150 2,909 364,964 741,9342006 Sharesissuedduring 91 636 - - - 727theperiod Profitfor the - - - - 114,925 114,925period Employeeshareoptionscheme: - valueofservices - - - 689 - 689provided-transferto - 397 - (397) - -sharepremiumaccount --------------- --------------- --------------- --------------- --------------- ---------------At 30 80,060 217,975 77,150 3,201 479,889 858,275June2007 ======== ======== ======== ======= ======== ======== The notes on pages 9 to 15 form an integral part of the financial information. Interim consolidated cash flow statement Unaudited Unaudited Audited 6 months ended 6 months year ended Note 30 June 2007 ended 31 December 2006 30 June 2006 US$'000 US$'000 US$'000 Profit before income tax 143,922 100,496 224,221Adjustments for: Depletion and depreciation 8 42,429 27,121 61,512 Loss on fair valuation of derivative financialinstruments 13 3,338 - - Employee share options - value of services provided 689 205 400 Profit on disposal of held for trading financial - (253) (253)asset Interest paid - 1,073 1,107 Interest on bank deposits (7,978) (6,217) (13,064) Excess tax provision written back (397) - - -------------------- ------------------- -------------------Operating cash flow before changes in working capital 182,003 122,425 273,923Changes in working capital: Inventories (10,439) (4,372) (37,285) Trade and other receivables 9 (9,052) (8,837) (14,002) Trade and other payables 13 767 (4,116) 5,340 -------------------- ------------------- -------------------Cash generated from operations 163,279 105,100 227,976 Interest paid - (539) (573)Income tax paid (39,730) (5,266) (5,266) -------------------- ------------------- -------------------Net cash generated from operating activities 123,549 99,295 222,137 -------------------- ------------------- ---------------------Cash flows from investing activities - -Additions to property, plant and equipment 8 (114,165) (58,301) (155,837)Interest received on bank deposits 5,732 6,217 11,295 Amounts withdrawn from interest collateral account - 6,569 6,569Proceeds from sale of held for trading financial asset - 1,148 1,148Amounts placed on deposit for terms over three months 10 (224,670) - - -------------------- ------------------- ---------------------Net cash used in investing activities (333,103) (44,367) (136,825) -------------------- ------------------- ---------------------Cash flows from financing activitiesProceeds from issue of share capital 12 727 - 46Debt repayments - (27,600) (27,600) -------------------- ------------------- ---------------------Net cash provided by/(used in) financing activities 727 (27,600) (27,554) -------------------- ------------------- ---------------------Net (decrease)/increase in cash and cash equivalents (208,827) 27,328 57,758 Cash and cash equivalents at the beginning of theperiod/year 296,208 238,450 238,450 -------------------- ------------------- ---------------------Cash and cash equivalents at the end of the period/year 10 87,381 265,778 296,208 =========== ========= ========= The notes on pages 9 to 15 form an integral part of the financial information. Selected notes to the financial information 1 General information Dragon Oil plc ("the Company") and its subsidiaries (collectively, "the Group")are engaged in upstream oil and gas development and production activities inTurkmenistan, and its head office is based in Dubai, United Arab Emirates. The Company is incorporated in Ireland and the address of its registered officeis 6th Floor, South Bank House, Barrow Street, Dublin 4, Ireland. Theregistration number is 35228. The Company's ordinary shares are listed on the official lists of the Irish andLondon Stock Exchanges. This financial information has been approved for issue by the Board of Directorson 16 September 2007. 2 Basis of preparation The Group's financial information for the period ended 30 June 2007 has beenprepared in accordance with the Listing Rules of the Irish Stock Exchange. TheGroup's financial information has been prepared in accordance with theaccounting policies that the Group expects to adopt for the 2007 year-end whichare consistent with the principal accounting policies which were set out in theGroup's 2006 consolidated financial statements. The principal accountingpolicies adopted by the Group for the 2006 year-end, as set out in the Group's2006 consolidated financial statements, were consistent with InternationalFinancial Reporting Standards ("IFRS") issued by the International AccountStandards Board as adopted by the European Commission for use in the EuropeanUnion ("EU"). The Group has chosen not to adopt International AccountingStandard ("IAS") 34 'Interim Financial Reporting' in preparing its 2007 interimfinancial information since adoption of this standard is not mandatory until theEU Transparency Directive is implemented through the Irish Stock Exchange'sListing Rules. The preparation of the financial information includes the use of estimates andassumptions that affect items reported in the consolidated balance sheet andincome statement and the disclosure of contingent assets and liabilities at thedate of the financial information. Although these estimates are based onmanagement's best knowledge of current circumstances and future events andactions, actual results may differ from those estimates, possibly significantly. The accounting policies have been consistently applied to all periods presented. 3 Accounting policies The accounting policies adopted are consistent with those of the annualfinancial statements for the year ended 31 December 2006, as described in theannual financial statements for the year ended 31 December 2006. The following new standards, amendments to standards and interpretations aremandatory for the financial year ending 31 December 2007. Standards - IFRS 7, Financial Instruments: Disclosures and the complementaryAmendment to IAS 1, Presentation of Financial information - Capital Disclosures(applicable from 1 January 2007). IFRS 7 introduces new disclosures relating tofinancial instruments. The Group will apply IFRS 7 in the annual financialstatements for the year ending 31 December 2007. - IFRS 8, Operating Segments (applicable for annual periods beginningon or after 1 January 2009). IFRS 8 sets out requirements for disclosure ofinformation about an entity's operating segments and also about the entity'sproducts and services, the geographical areas in which it operates, and itsmajor customers. Management is currently assessing the impact of IFRS 8 on theGroup's operations. Selected notes to the financial information (continued) 3 Accounting policies (continued) Interpretations - International Financial Reporting Interpretations Committee interpretation ("IFRIC") 7, Applying the Restatement Approach under IAS 29(effective from 1 March 2006). Management do not expect the interpretation to berelevant to the Group. - IFRIC 8, Scope of IFRS 2. Effective for annual periods beginning on or after 1 May 2006. This interpretation is not expected to have any impact on the Group's accounts. - IFRIC 9, Reassessment of Embedded Derivatives. Effective for annual periods beginning on or after 1 June 2006. IFRIC 9 is not expected to have anymaterial impact to the Group's operations. - IFRIC 10, Interim Financial Reporting and Impairment. Effective for annual periods beginning on or after 1 November 2006. IFRIC 10 is presently not applicable to the Group's operations. - IFRIC 11, IFRS 2 - Group and treasury share transactions (effective for annual periods beginning on or after 1 March 2007). IFRIC 11 requires consideration for share based payment arrangements where an entity receivedgoods or services as consideration for its own equity instruments and in asubsidiary that has an obligation to provide its employees with parent entityinstruments for the services it receives from its employees. The Group willapply IFRIC 11 in the annual financial statements for the year ending 31December 2007. - IFRIC 12, Service Concession Arrangements. IFRIC 12 is not relevantto the Group's operations. 4 Critical accounting estimates and assumptions The Group's share of proven and probable oil reserves, at 30 June 2007 is 295million barrels (31 December 2006: 301 million barrels) of total field reservesof 638 million barrels (31 December 2006: 643 million barrels). In arriving atthe Group's share of reserves and, consequently, the depletion charge,significant assumptions have been made in the following areas and any materialchange to the underlying assumptions will have a material effect on the Group'sshare of oil reserves and therefore the annual depletion charge: • management's long term view of the crude oil price for the next 28 years; • timing of the capital expenditure spend; • crude oil production profile for the next 28 years; • cost estimates for capital and non-capital expenditure and production costs; • availability of rigs; and • flow rates. The Group has continued with its long-term view of oil prices of US$40 perbarrel in arriving at the Group's share of reserves and the depletion rate. The effect of an upward revision in the long-term oil price is to lower thenumber of reserves attributable to the Group and to increase the depletioncharge per barrel. If the estimate of the long-term oil price had been US$5 per barrel higher, thereserves attributable to the Group at the end of the period would have decreasedto 284 million barrels, with a consequent increase in the depletion charge byUS$1.6 million during the period. If the estimate of the long-term oil price had been US$5 per barrel lower, thereserves attributable to the Group at the end of the period would have increasedto 307 million barrels, with a consequent decrease in the depletion charge byUS$2.2 million during the period. Selected notes to the financial information (continued) 4 Critical accounting estimates and assumptions (continued) The recoverability of amounts recorded as development and production assets isdependent upon the satisfactory completion of the development of the oilreserves in Turkmenistan, which is subject to the operational and geopoliticalissues in Turkmenistan. 5 Revenue Revenue arose from a single class of business which is crude oil sales andrelated activities in Central Asia. Accordingly, no segmental information hasbeen provided. 6 Dividends The Directors do not recommend the payment of a dividend in respect of the sixmonths ended 30 June 2007 (2006: nil). 7 Earnings per share The calculation of basic earnings per ordinary share is based on the weightedaverage number of 510,491,234 ordinary shares in issue during the six months to30 June 2007 (1H 2006: 510,087,781) and on the profit for the period of US$114.9million (1H 2006: US$80.8 million). Calculation of diluted earnings per ordinary share is based on the dilutednumber of 511,858,026 ordinary shares in issue during the six months to 30 June2007 (1H 2006: 512,457,553) adjusted to assume conversion of potential dilutiveoptions over ordinary shares. Options over 2.5 million shares given to theChairman and CEO in 2005 at Stg.181p are non-dilutive. Selected notes to the financial information (continued) 8 Property, plant and equipment Development and production assets Others Total US$'000 US$'000 US$'000CostAt 1 January 2006 492,271 1,158 493,429Additions for the period 65,719 314 66,033 ------------------ ------------- ------------------At 30 June 2006 557,990 1,472 559,462Additions for the period 109,505 86 109,591 ------------------ ------------- ------------------At 31 December 2006 667,495 1,558 669,053Additions for the period 110,836 - 110,836 ------------------ ------------- ------------------At 30 June 2007 778,331 1,558 779,889 ------------------ ------------- ------------------Depletion/depreciation At 1 January 2006 93,590 1,108 94,698Charge for the period 27,059 62 27,121 ------------------ ------------- ------------------At 30 June 2006 120,649 1,170 121,819Charge for the period 34,289 102 34,391 ------------------ ------------- ------------------At 31 December 2006 154,938 1,272 156,210Charge for the period 42,388 41 42,429 ------------------ ------------- ------------------At 30 June 2007 197,326 1,313 198,639 ------------------ ------------- ------------------Net book amountAt 30 June 2007 581,005 245 581,250 ========= ==== =========At 30 June 2006 437,341 302 437,643 ========= ==== =========At 31 December 2006 512,557 286 512,843 ========= ==== ========= 9 Trade and other receivables Unaudited Unaudited Audited 30 June 30 June 31 December 2007 2006 2006 US$'000 US$'000 US$'000 Trade receivables 43,570 30,038 35,013Other receivables 286 210 239Interest receivable 4,015 - 1,769Prepayments 1,107 498 659 -------------------- -------------------- -------------------- 48,978 30,746 37,680 ========= ========= ========= Selected notes to the financial information (continued) 10 Cash and cash equivalents Unaudited Unaudited Audited 30 June 30 June 31 December 2007 2006 2006 US$'000 US$'000 US$'000 Cash at bank and in hand 312,051 265,778 296,208Less: Term deposits with originalmaturity of over 3 months (224,670) - - -------------------- -------------------- --------------------Cash and cash equivalents 87,381 265,778 296,208 ========= ========= ========= Cash at bank includes term deposits of US$ 40 million (1H 2006: US$210.7million), representing interest bearing deposits with a maturity of less thanthree months. 11 Income tax expense Income tax expense is recognised based on management's best estimate of theweighted average annual income tax rate expected for the full financial year.The estimated average annual tax rate used for 2007 is 20.15%. This rate isapplicable from 1 January 2007. During the period, Dragon recognised a current tax charge of US$24.1 million (1H2006: US$17.5 million) and a deferred tax charge of US$4.9 million (1H 2006:US$2.2 million). The deferred tax charge is due to temporary differencesbetween the charges to the income statement and those computed under the taxlaws of Turkmenistan, which principally relate to accelerated tax depreciation. 12 Capital Number of Ordinary Share shares shares premium Total (thousands) US$'000 US$'000 US$'000 At 1 January 2006 and 30 June 2006 510,088 79,937 216,928 296,865Shares issued during the year:- Share options 250 32 14 46 ----------------- --------------- ----------------- ------------------At 31 December 2006 510,338 79,969 216,942 296,911Shares issued during the year:- Share options 675 91 636 727Transfer from fair value reserve- Share options - - 397 397 ----------------- --------------- ----------------- ------------------At 30 June 2007 511,013 80,060 217,975 298,035 ======== ======= ======== ======== Selected notes to the financial information (continued) 13 Trade and other payables Unaudited Unaudited Audited 30 June 30 June 31 December 2007 2006 2006 US$'000 US$'000 US$'000 Trade creditors 15,240 13,455 25,330Accruals 27,384 17,142 27,185Advances from customers 1,050 4,921 -Payable to abandonment fund 13,347 3,242 7,454Derivative financial instruments 3,338 - -Other creditors 857 169 471 -------------------- -------------------- -------------------- 61,216 38,929 60,440 ========= ========= ========= Trade creditors and accruals include amounts of US$14.4 million (2006: US$24.5million) and US$25.2 million (2006: US$18.5 million) respectively, relating toadditions to property, plant and equipment. Amount payable to the abandonmentfund is net of a balance of US$9.5 million (2006: US$9.5 million) which is heldin a restricted bank account. 14 Related party transactions a) Transactions and balances The Company's largest shareholder is Emirates National Oil Company (ENOC) L.L.C.("ENOC"), which owns approximately 51.91% of the Company's ordinary sharecapital. Three members of the Board, Mr. Hussain Sultan (appointed 26 November1998), Mr. Ahmad Sharaf (appointed 25 April 2007) and Mr. Mohammed Al Ghurair(appointed 25 April 2007) are nominees of ENOC. During the current period, the Group charged US$ 0.3 million (1H 2006: US$ 0.3million) to the income statement relating to administrative services from ENOC. The Group charged ENOC an amount of US$ 0.2 million (1H 2006: US$ 0.1 million),for the use of the Group's London office. b) Key management compensation Unaudited Unaudited Audited 30 June 30 June 31 December 2007 2006 2006 US$'000 US$'000 US$'000 Fees 69 62 114Salaries and short-term benefits 811 588 1,039Termination benefits 217 87 79Share based payments 184 38 49 -------------- ----------- ------------- 1,281 775 1,281 ====== ===== ====== Selected notes to the financial information (continued) 15 Commitments a) Capital commitments Committed future expenditure for property, plant and equipment for whichcontracts had been placed at 30 June 2007 amounted to US$ 169.5 million(unaudited 30 June 2006: US$ 187.5 million, audited 31 December 2006: US$ 105.3million). b) Operational commitments Irrevocable letters of credit of US$ 3.4 million were in issue at 30 June 2007towards supply of equipment and services. 16 Statutory accounts The financial information presented in this interim report does not representfull statutory accounts. Full statutory accounts for the year ended 31 December2006, prepared in accordance with IFRS and containing an unqualified auditreport, have been delivered to the Registrar of Companies. Independent review report to Dragon Oil plc Introduction We have been instructed by the company to review the financial information forthe six months ended 30 June 2007 which comprises the consolidated balance sheetas at 30 June 2007 and the related consolidated statements of income, cash flowsand changes in shareholders' equity for the six months then ended and relatednotes. We have read the other information contained in the interim report andconsidered whether it contains any apparent misstatements or materialinconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The Listing Rulesof the Irish Stock Exchange require that the accounting policies andpresentation applied to the interim figures should be consistent with thoseapplied in preparing the preceding annual accounts except where any changes, andthe reasons for them, are disclosed. This interim report has been prepared in accordance with the basis set out inNote 2. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4Review of Interim Financial Information issued by the Auditing Practices Boardfor use in the United Kingdom and Ireland. A review consists principally ofmaking enquiries of management and applying analytical procedures to thefinancial information and underlying financial data and, based thereon,assessing whether the disclosed accounting policies have been applied. A reviewexcludes audit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditand therefore provides a lower level of assurance. Accordingly we do notexpress an audit opinion on the financial information. This report, includingthe conclusion, has been prepared for and only for the company for the purposeof the Listing Rules of the Irish Stock Exchange and for no other purpose. We donot, in producing this report, accept or assume responsibility for any otherpurpose or to any other person to whom this report is shown or into whose handsit may come save where expressly agreed by our prior consent in writing. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2007. PricewaterhouseCoopersChartered AccountantsDublin 17 September 2007 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
DGO.L