Drilling Update

FOR IMMEDIATE RELEASE

11 January 2011

DRAGON OIL PLC

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

Drilling Update

Dzheitune (Lam) B/150 well tested at initial combined rate of 1,622 bopd

Dragon Oil plc (Ticker: DGO), an international oil and gas exploration and production company, announces the completion and initial testing of the Dzheitune (Lam) B/150 development well. The Dzheitune (Lam) B/150 was drilled to a depth of 3,980 metres and completed as a dual producer by the Iran Khazar rig. The combined initial test rate was 1,622 barrels of oil per day ("bopd") with the short and long strings testing at 632 and 990 bopd,respectively. The Iran Khazar rig has skidded to the next slot and spudded the Dzheitune (Lam) B/153 well.

Dr Abdul Jaleel Al Khalifa, Chief Executive Officer, commented:

"I am pleased to report that we have now fulfilled the 2010 drilling programme with the last of the 11 planned wells put into production in the first week of January this year.

"We have also met another significant objective for 2010 having completed and commissioned important new pipeline and processing infrastructure. As we gradually switch over to using the new 30-inch trunkline and associated in-field pipelines, we are already seeing improved average daily flow rates. With the integrated network of 30-inch trunkline, 14-, 18- and 20-inch in-field pipelines and the expanded Central Processing Facility, the infrastructure bottlenecks that constrained production growth have been completely removed."

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About Dragon Oil

Dragon Oil plc is an international oil and gas 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).

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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.