Drilling Update

FOR IMMEDIATE RELEASE

13 January 2012

DRAGON OIL PLC

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

Drilling Update

·; Dzheitune (Lam) 13/140A sidetrack tested at initial rate of 2,123 barrels of oil per day

·; Dzheitune (Lam) A/165 well tested at initial rate of 2,272 barrels of oil per day

·; Iran Khazar rig commenced drilling on the Dzheitune (Lam) C platform

·; 2011 exit production rate 71,751 barrels of oil per day

Dragon Oil plc (Ticker: DGO), an international oil and gas exploration, development and production company, announces the following update on its ongoing drilling programme.

The Dzheitune (Lam) 13/140A sidetrack was completed with a single string to a depth of 2,237 metres by Rig 40 and tested for initial production at 2,123 barrels of oil per day ("bopd"). This shows the great potential of side tracking low producing wells in the future. Rig 40 has now returned to the Dzheitune Lam 13/163 well to make additional perforations in new intervals to improve the flow capacity of this well. The initial test rate from the Dzheitune (Lam) 13/163 well, achieved at deeper reservoir intervals in December 2011, was 296 bopd.

The Dzheitune (Lam) A/165 well was completed as a dual producer to a depth of 3,060 metres by the Iran Khazar rig. The short and long strings tested at the initial rate of 1,231 bopd and 1,041 bopd, respectively. The well tested for the combined initial production at 2,272 bopd. 

The Iran Khazar rig has been mobilised to the Dzheitune (Lam) C platform and has spudded the Dzheitune (Lam) C/167 development well.

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

"I am extremely pleased to announce a successful start to the 2012 Cheleken drilling programme. We have already completed and tested one development well and one sidetrack well, and drilling from the Dzheitune (Lam) C platform has commenced on schedule. We exited 2011 at the production rate of 71,751 bopd, ahead of our 70,000 bopd target, which was reached in mid-December. The good news reported today puts us in a strong position to continue to deliver solid results from the Cheleken Contract Area as we progress through the year."

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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.