Marketing Update

DRAGON OIL PLC

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

Marketing Update - Extension to Contract

Dragon Oil plc (Ticker: DGO), an international oil and gas exploration, development and production company, today announces the extension of its contract with Socar Trading SA for the sale of the Group's share of crude oil production, FOB the Aladja Jetty, through Baku, Azerbaijan. Dragon Oil has agreed an extension with Socar Trading that will secure a reliable export route for all its anticipated entitlement production through the western route until 31 December 2012. It is expected that the realised crude oil prices under this extension will range at 10% to 13% (1H 2011: 10%) discount to Brent dependent on the level of oil prices and will be marginally less favourable than the current realised crude oil prices generated under the same route.

Dragon Oil is satisfied that this extension to its current marketing arrangement will achieve its key marketing objective: to ensure the safe and uninterrupted transportation, export and sale of our crude oil share to international markets and to achieve best market price, subject to logistical considerations and market conditions. Nevertheless, to gain further access to international markets and maintain flexibility in operations, Dragon Oil will continue to review alternative routes for exporting its crude oil, including a return to the "southern route", i.e. Neka, Iran, which remains an option should terms and conditions become more favourable.

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

"I am pleased to announce an extension on satisfactory terms of the current contract with Socar Trading until the end of 2012. As a producer of crude oil, Dragon Oil aims to maintain the longer-term stability of production and sales, and the export route through Baku, Azerbaijan has proven to be reliable for this key aspect of our business. We will continue to consider alternative routes for the future years."

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Investor and analyst enquiries

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

Anna Gavrilova

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

Martin Jackson

Sally Marshak

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.