17th Jul 2007 14:30
Dragon Oil PLC17 July 2007 17 July 2007 PRESS RELEASE DRAGON OIL plc Dragon Oil Plc ("Dragon Oil" or the "Company") TRADING AND OPERATIONAL UPDATE Dragon Oil today issued the following trading and operational update for the 6month period ended 30 June 2007. The information herein has not been audited andis subject to further review. First half 2007 Highlights • Average production of 28,321 barrels of oil per day ("bopd") in 1H2007, a 52% increase over the average daily production for 1H 2006. • Four wells completed, three development wells and one appraisal well.A further development well expected to be completed in July 2007. • Two platform-based rigs are being mobilised, with the CIS-1 rigplanned to spud its first well from the LAM 22 platform in August 2007 andDragon Oil's own Rig 40 expected to be deployed in Quarter 4 this year, bringingrigs in operation to three. • Infrastructure development programme continues with capitalexpenditure excluding drilling costs of over US$100 million in 1H 2007. • Oil price hedges using collars were executed for calendar years 2007and 2008 on a zero cost basis. Hussain Sultan, Chairman & CEO, commented: "I am pleased with our achievements in the first six months of this year. Ourstrategy is progressing well and this is, in particular, reflected by thesignificant improvement in our production levels. We operated two rigs for partof this year and are working to deploy the two platform based rigs as soon aspossible, with a view to having three rigs operating before the end of thisyear. "Dragon Oil's infrastructure development programme is progressing as expected.In addition to the 50,000 bopd Processing Facility which was commissionedearlier this year, we have installed several infield pipelines and havecompleted phase 1 of the project to upgrade the export jetty".Enquiries:Citigate Dewe Rogerson +44 207 638 9571 Media enquiries: Martin Jackson / George Cazenove Analyst enquiries: Nina Soon Trading and Operational update Production and marketing Gross field production for 1H 2007 was 5.1 million barrels of oil (1H 2006: 3.4million barrels) or an average of 28,321 bopd (1H 2006: 18,576 bopd). Of this,21,062 bopd was attributable to Dragon Oil (1H 2006: 13,444 bopd). The averagerealised price in 1H 2007 was US$61.2 per barrel (1H 2006: US$61.1 per barrel). The Board's policy is to consider hedging when it is economically attractive tolock-in oil prices at levels that protect the Company's development plans.Dragon Oil has hedged 3.7 million barrels of 2007 production and 3.8 millionbarrels of 2008 production on a zero cost basis, by using collars. The averagefloor per barrel for the 2007 production collar was US$45 and the averageceiling was US$86. The average floor price per barrel for the 2008 productioncollars was US$45 and the average ceiling was US$102. Drilling and workover Three development wells have been completed in 1H 2007: wells 21/117 and A/119were completed using the Iran Khazar rig and well 13/118 was completed using theAstra rig. In addition, one appraisal well, 28/120, was completed on the LAMWest structure using the Astra rig. Prior to its departure, the Astra rig moved to the LAM 21 platform and undertooka workover of well 21/117 to successfully put the lower zones of well 21/117 onproduction, which were earlier inaccessible due to a downhole obstruction. Postthe workover, well 21/117 tested at a combined rate of 2,223 bopd, and effortsto optimise flow rates are ongoing. Dragon Oil completed four workovers during the period with a hydraulic workoverunit, which contributed approximately 900 bopd of incremental production, withadditional upside as the wells are optimised. Current operations and outlook The Iran Khazar rig has recently completed drilling well A/121, from the LAM Aplatform. This well has been drilled to a depth of 4,010 metres and the resultsare being evaluated. The Iran Khazar has been skidded over to drill a furtherdevelopment well, A/122 from the same platform. Workover operations are in progress on the LAM 10 platform on well 10/10 usingthe hydraulic workover unit. The workover programme will be extended to otherwells and is expected to continue throughout 2007. Notes to Editors: (1) Dragon Oil plc is an independent oil and gas exploration and productioncompany with interest in the Caspian Sea, Turkmenistan. Dragon is listed on theLondon Stock Exchange and the Irish Stock Exchange ('DGO.') (2) Dragon Oil (Turkmenistan) Ltd., a wholly owned subsidiary of Dragon Oilplc, holds 100% interest in and is the operator for a 25-year base term of theProduction Sharing Agreement ("PSA") for the Cheleken Contract Area. Developmentof the two oil producing fields, Dzheitun ("LAM") and Dzhygalybeg ("Zhdanov") inthe Contract Area commenced in May 2000. Dragon has an exclusive right tonegotiate an extension to the PSA for a further period of not less than 10years. (3) For further information on Dragon see www.dragonoil.com This announcement has been issued through the Companies Announcement Service of The Irish Stock Exchange. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
DGO.L