Initialling of Contract - Iraq

16 July 2012

DRAGON OIL PLC

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

Initialling of Contract for Iraqi Exploration Block 9

Dragon Oil plc (Ticker: DGO), an international oil and gas exploration, development and production company, announces that the Iraqi Ministry of Oil and a consortium of companies, including Dragon Oil, today initialled the exploration, development and production service contract ("EDPSC") for Block 9 in Iraq. This is the first step in a formal process before the signing of the final contract, which is anticipated later this year.

Dragon Oil bid jointly with Kuwait Energy and the Turkish Petroleum Corporation (TPAO), the national oil company of Turkey, in respect of Block 9. Kuwait Energy will be the operator in the EDPSC for Block 9, participating with a 40% contractor share, with TPAO having 30% and Dragon Oil 30%. Block 9 is located in the Basra province and covers an area of 900km2. If Block 9 is found to be commercial during the five-year exploration period, the consortium may make an application to the Iraqi Government to develop the block over a 20-year development period.

The consortium's bid for Block 9 was awarded on the basis of a remuneration fee of US$ 6.24 per barrel of oil equivalent. Compared to the previous bid rounds in Iraq, there was no stipulated plateau production target for blocks awarded in this bid round.

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

"I am pleased to announce the initialling of the service contract for Block 9 by the Iraqi Ministry of Oil and the Iraq Block 9 consortium, including Dragon Oil. This precedes the signing of the final contract anticipated later this year. This move into Iraq demonstrates our endeavour to diversify Dragon Oil's portfolio. It will also facilitate working with our consortium partners to bring success in the development of Iraq's hydrocarbon resources."

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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.