Drilling and Production Update

FOR IMMEDIATE RELEASE

16 May 2012

DRAGON OIL PLC

(the "Company" or together with its subsidiaries "Dragon Oil" or the "Group")

Drilling and Production Update

Dragon Oil plc (Ticker: DGO), an international oil and gas exploration, development and production company, publishes an update on the successful completion and initial testing of the Dzheitune (Lam) 28/169 development well and on the Group's recent production performance.

The Dzheitune (Lam) 28/169 well was completed as a single producer to a depth of 2,010 metres. It tested for initial production at 1,775 barrels of oil per day ("bopd"). The drilling rig has skidded to the next slot and spudded the Dzheitune (Lam) 28/172 well.

Early in 2Q 2012, a number of older wells were choked down to minimise possible production of sand; that had an impact on the oil flow from these wells. We are gradually bringing the wells back to normal levels of flow by installing sand screens in some of those affected older wells as well as desanders on certain platforms in areas prone to sand production.

Over the last two years, we have been installing sand screens on newer wells to control sand production and to ensure effective oil flow from well completions and we will continue to do so in 2012. In 2011, we also installed a desander on the Dzheitune (Lam) 63 platform.

Taking into account the performance in 1Q 2012 and estimates for 2Q 2012, we forecast that the average gross production growth in 1H 2012 is likely to be around 10%-15% over the average gross production level of 58,000 bopd achieved in 1H 2011. We expect to return to the above 70,000 bopd level in July. We are seeking to optimise the drilling programme for the remainder of the year including a possibility of drilling some additional wells. We maintain our guidance for the gross production growth rate for the full year in 2012 at 15%.

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For further information please contact:

Investor and analyst enquiries

Dragon Oil plc (+44 (0)20 7647 7804)

Anna Gavrilova

Media enquiries

Citigate Dewe Rogerson (+44 (0)20 7638 9571)

Martin Jackson

Kate Lehane

About Dragon Oil

Dragon Oil plc is an international oil and gas exploration, development and production company, quoted on the London and Irish Stock exchanges (Ticker symbol: DGO). Its principal producing asset is in the Cheleken Contract Area, in the eastern section of the Caspian Sea, offshore Turkmenistan.

Dragon Oil (Turkmenistan) Ltd., a wholly owned subsidiary of Dragon Oil plc, holds 100% interest in and is the operator of the Production Sharing Agreement for the Cheleken Contract Area. The operational focus is on the re-development of two oil-producing fields, Dzheitune (Lam) and Dzhygalybeg (Zhdanov).

www.dragonoil.com

Disclaimer

This news release may contain forward-looking statements concerning the financial condition and results of operations of Dragon Oil. Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. No assurances can be given as to future results, levels of activity and achievements and actual results, levels of activity and achievements may differ materially from those expressed or implied by any forward-looking statements contained in this report. Dragon Oil does not undertake any obligation to update publicly or revise any forward-looking statement as a result of new information, future events or other information.