Interim Management Statement

29 October 2013

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

Interim Management Statement

Dragon Oil plc (Ticker: DGO), an international oil and gas exploration, development and production company, issues its Interim Management Statement in accordance with the EU Transparency Directive. The statement covers the period from 1 July 2013 to-date. The financial and production data are for the period from 1 July 2013 to 30 September 2013. All other information, including details on operations, is up-to-date as at 29 October 2013.

Key highlights

- Two new wells put into production in 3Q 2013;

- Average daily gross production reached 74,300 barrels of oil per day (bopd) in 3Q 2013;

- Capital expenditure on infrastructure, drilling and exploration assets amounted to approximately US$80 million for 3Q 2013;

- Three-year contract awarded for the lease and management of Neptune and Mercury jack-up drilling rigs;

- Exploration and production sharing contracts (EPSC) for two blocks, Sanduqli and Mazar-i-Sharif, in Afghanistan formally signed by the Ministry of Mines and Petroleum of Afghanistan;

- An Independent Non-executive Director appointed to the Board of the Company.

Dr Abdul Jaleel Al Khalifa, CEO, commented:

"Gross production growth of 7% to 74,300 bopd compared to the same period last year represents good progress and we have seen encouraging results from artificial lift and positive indications from the water injection programme. On the other hand, delays in the mobilisation of new rigs will result in Dragon Oil being able to complete only 10 wells in 2013 with another two wells to be spudded this year but completed in early 2014. As a result of fewer wells to be completed in 2013, we expect to grow production at between 9 and 10%.

"As we are receiving the jack-up and land rigs later this year and in 2014, we are positive that with up to five drilling rigs secured and operational for most of 2014 and 2015, we have more confidence in achieving our target of reaching 100,000 bopd in 2015.

"Testing of the Hammamet West-3 well has not yet been completed due to problems caused by lost circulation material. There is now an option to drill a second sidetrack following confirmation of open hydrocarbon fractures in the formation by the first sidetrack. In Iraq, a drilling rig has been secured to spud a well in 4Q 2013. In Afghanistan, the contracts for two blocks have been formally signed and we look forward to working with our partners in the country.

"We have strengthened the Group with the appointment of Mr Justin Crowley, who has extensive experience in accounting, auditing and internal control, as an Independent Non-executive Director to the Board."

INTERIM MANAGEMENT STATEMENT

MATERIAL EVENTS

Turkmenistan

Production and entitlement

Average gross field production for 3Q 2013 was 74,300 bopd (3Q 2012: 69,600 bopd). This represents a 7% increase over the level reached during the corresponding period in 2012. Two new development wells were put into production during the third quarter.

The entitlement production for 3Q 2013 was approximately 43% (3Q 2012: 46%) of the gross production. The entitlement barrels are finalised in arrears and are dependent on, amongst other factors, operating and development expenditure in the period and the realised crude oil price. Lower proportion of entitlement barrels in 3Q 2013 is due primarily to lower development expenditure during the quarter despite lower realised oil prices.

Marketing

Dragon Oil sold 3.2 million barrels of crude oil in 3Q 2013 (3Q 2012: 2.8 million barrels), which is 14% higher than the volume sold during the corresponding period last year. In 3Q 2013, Dragon Oil exported 100% (3Q 2012: 100%) of its crude oil production through Azerbaijan.

Drilling

In 3Q 2013, Dragon Oil put into production two wells on the Dzheitune (Lam) C platform using the jack-up rig.

The Dzheitune (Lam) C/184 well was drilled between the Dzheitune (Lam) C and B platforms; the location was selected on the basis of seismic data as well as production performance of a neighbouring well. The aim was to delineate this area. The well has encountered water in an upper section and will, therefore, be side-tracked in the future. This result does not affect our current development plans for the area nor recoverable reserves attributed to the area.

The jack-up rig is currently drilling the Dzheitune (Lam) C/185 well, which will be followed by one more well on the Dzheitune (Lam) C platform to be completed before the end of the year.

The leased platform-based rig ("Land Rig 1"), currently on scheduled maintenance, is expected to commence drilling on the Dzheitune (Lam) 22 platform in 4Q 2013. The well will be completed in 1Q 2014.

The arrival of the contracted platform-based rig ("Land Rig 2") for drilling on the Dzhygalybeg (Zhdanov) A platform is anticipated in 4Q 2013 and the rig is expected to spud the first new development/appraisal well in the Dzhygalybeg (Zhdanov) field in 1Q 2014. The delivery of the other contracted platform-based rig ("Land Rig 3") is expected later in 2014.

As announced on 3 October 2013, Dragon Oil awarded a contract for the lease and management of two jack-up drilling rigs from BKE Shelf Ltd for a total period of three years. The first of these rigs, the Neptune rig, is due to arrive shortly and commence drilling a well on the Dzhygalybeg (Zhdanov) 21 platform, which is likely to be completed in 1Q 2014.

The Caspian Driller jack-up rig ("the Caspian Driller") is due to be mobilised to the Cheleken Contract Area by the end of 2013 with drilling expected to commence in 1Q 2014.

Artificial lift and water injection

The water injection project in the Dzheitune (Lam) 75 area, which commenced in June 2013, has been progressing with early positive indications of the pressure response in the pilot area. Given encouraging results so far, Dragon Oil plans to expand water injection operations to two or three other platforms during 2014. The aim of water injection programme is to maintain pressure, sustain production rates and increase reserves recovery.

An artificial lift programme in the form of jet pumps started in June 2013 in two wells on the Dzheitune (Lam) 13 platform: 13/118 and 13/168. This led to a production increase in the range of 500-700 bopd per well. The impact from jet pumps application has, thus far, been encouraging. A jet pump is currently being installed in another well on the same platform. We intend to expand jet pumps operations to other select platforms during 2014. The objective of jet pumps application is to increase production and enhance recovery.

Infrastructure

The Dzhygalybeg (Zhdanov) A platform has been put in water and is ready for drilling pending the arrival of Land Rig 2.

The Dzhygalybeg (Zhdanov) B platform is being relocated to the Dzheitune (Lam) field. The original plan was to drill and test potential from the Dzhygalybeg (Zhdanov) A platform before installing a second platform, the Dzhygalybeg (Zhdanov) B, in the field. Due to delays with the delivery of the Dzhygalybeg (Zhdanov) A platform, the two platforms are ready at the same time. It has therefore been decided to relocate the Dzhygalybeg (Zhdanov) B platform to the Dzheitune (Lam) field, to accelerate production from known areas in that field. The process is expected to take another year to perform required structural modifications and install the platform in the desired location. Installation of the platform is expected to coincide with the delivery of Land Rig 3.

Dragon Oil has performed structural upgrades of the Dzheitune (Lam) 22 platform, which allowed to add slots for drilling from this platform to reach more targets. Work to add slots is scheduled for a number of other Dzheitune (Lam) platforms, namely B, C, 28, 10 and 4. This allows us to optimise the development plans and accelerate production from these areas.

The contract for an engineering, procurement, installation and construction project to quadruple our crude oil storage capacity at the Central Processing Facility was awarded in September 2013 to an international construction contractor. The tank farm is anticipated to be completed in 4Q 2015 with three tanks built and commissioned on a priority basis.

The tendering process to select a contractor to build another 30-inch trunkline from the Dzheitune (Lam) field to the Central Processing Facility is ongoing. The award of the contract is expected in 1H 2014. Partial replacement of the two existing 12-inch pipelines is expected to finish in 1Q 2014.

The tendering process for an engineering, procurement, installation and construction project for the Gas Treatment Plant is ongoing. The intention is to award a contract around the year end. We anticipate the construction phase to take two to three years after the contract is awarded.

Tunisia

Initial production testing of Sidetrack-1 confirmed the presence of open hydrocarbon bearing fractures, but could not be completed due to ongoing blockages and obstructions caused by lost circulation material. The Hammamet West-3 well is currently being suspended.

Sidetrack-2 can be drilled in the Abiod formation from the original Hammamet West-3 wellbore to intersect fractures identified previously and to reach the originally targeted fracture zone. Previously employed GSP drilling rig is to be released and an alternative rig is expected to be secured to drill Sidetrack-2 in the near future.

Dragon Oil has contributed 75% of the cost to drill the Hammamet West-3 well, according to an agreed well plan scope, up to a cost cap of US$26.6 million (on a 100% basis). Costs in excess of the cost cap are shared among the joint venture partners pro rata to their participating interest (Dragon Oil 55%; Cooper Energy, 30% and operator; and Jacka Resources Ltd, 15%). The estimated well cost to-date is US$85 million.

Iraq

The consortium (Kuwait Energy 70% and operator and Dragon Oil 30%) has secured a drilling rig from the Iraqi Drilling Company (IDC) to spud an exploration well in 4Q 2013. In parallel, the consortium has selected a provider for Environmental Impact Assessment, Environment Base Line Survey and contractors to perform de-mining activities.

The work commitment on the block within the initial five-year exploration period will include de-mining, seismic acquisition and interpretation and drilling of an exploration well.

Afghanistan

On 8 October 2013, Dragon Oil announced the formal signing by the Ministry of Mines and Petroleum of Afghanistan of the exploration and production sharing contracts for two blocks, Sanduqli and Mazar-i-Sharif, of the Afghan-Tajik Phase 1 Oil & Gas Tender.

The participating interest of Dragon Oil, Turkiye Petrolleri A.O. (TPAO) and the Ghazanfar Group in the two blocks is 40%, 40% and 20%, respectively. Dragon Oil will be the operator of the Sanduqli block while the Mazar-i-Sharif block will be operated by TPAO. The Sanduqli block borders Turkmenistan and Uzbekistan in the north and spans 2,583 square kilometres. The Mazar-i-Sharif block borders Uzbekistan in the north and has an area of 2,715 square kilometres.

Work commitments on the blocks within the initial four-year exploration period will include seismic acquisition and interpretation and drilling of two exploration wells in each block.

Board Appointment

On 2 September 2013, Dragon Oil announced the appointment of Mr Justin Crowley as an Independent Non-executive Director. Mr Crowley is an Audit and Assurance Partner at BDO International specialising in regulated industries, oil and gas industry and other manufacturing and industrial sectors. Mr Crowley is based in Dubai, UAE. Prior to joining BDO International, Mr Crowley had an extensive audit career with PricewaterhouseCoopers as an auditor and with two UK-based mid-tier auditing firms as a Director. His working experience covers external audit services; internal audit, specifically risk management, corporate governance, compliance audit; as well as forensic audit and corporate advisory.

FINANCIAL UPDATE

Realised prices

The average realised crude oil price during 3Q 2013 was approximately US$94/bbl (3Q 2012: US$98/bbl), which was 4% lower compared to the corresponding period last year. During the third quarter of this year, the Group's average realised crude oil prices were at a provisional discount of approximately 15% (3Q 2012: a discount of 11%) to Brent. For the year to 31 December 2013, Dragon Oil expects to achieve an average realised price at about 14-21% discount to Brent.

Cash and cash equivalents

Cash and cash equivalents and term deposits at 30 September 2013 were approximately US$1,761 million (30 June 2013: US$1,651 million), excluding the funds set aside for abandonment and decommissioning activities.

Capital expenditure

Capital expenditure for 3Q 2013 was approximately US$80 million (3Q 2012: US$91 million). Of this capital expenditure, approximately 33% was attributable to infrastructure, 46% to development drilling with the balance spent on exploration activities. The infrastructure spend during the period included construction of the Dzhygalybeg (Zhdanov) A and B platforms, partial replacement of the existing two 12-inch pipelines, structural upgrades and additional slots on a number of platforms.

The Group's total capital expenditure on infrastructure, drilling and exploration activities in 2013 is expected to amount to approximately US$435 million.

OUTLOOK

Before the end of the year, the jack-up rig will complete the Dzheitune (Lam) C/185 and C/186 wells; leased Land Rig 1 is expected to spud a well on the Dzheitune (Lam) 22 platform and Neptune is scheduled to spud a well on the Dzhygalybeg (Zhdanov) 21 platform. Delays to rig arrivals have impacted the number of wells that can be completed this year. In total for 2013, 10 wells will have been drilled and completed with two more wells spudded but due to be completed in early 2014. Gross production growth in 2013 is expected to be between 9 and 10%.

Details on the Group's drilling programme and capital expenditure for 2014 will be provided in the Trading Statement to be published on 14 January 2014.

We re-iterate our guidance of a production growth rate of 10%-15% per annum on average over the 2014-15 period, taking our gross field production to a level of 100,000 bopd in 2015 with the aim of maintaining this level for a minimum period of five years from 2016.

- end -

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

Priscilla Garcia

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 and gas producing fields, Dzheitune (Lam) and Dzhygalybeg (Zhdanov).

The Group has exploration blocks in Tunisia, Iraq and Afghanistan. Dragon Oil's diversification strategy is to add exploration and production assets within Africa, parts of Asia and the Middle East in order to create a diversified and balanced portfolio of assets for the Group.

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.