Trading Statement

16 July 2013

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

Trading Statement

Dragon Oil plc (Ticker: DGO), an international oil and gas exploration, production and development company, today issues the following trading statement, which includes an operational update and financial highlights for the six months' period ended 30 June 2013. All information referred to in this update is unaudited and subject to further review. Dragon Oil expects to publish its 2013 Interim financial results on 6 August 2013.

Key operational highlights

·; 15% increase in average daily production rate at approximately 73,600 barrels of oil per day ("bopd") in 1H 2013 compared to 64,200 bopd in 1H 2012;

·; Six wells, including one sidetrack, completed from 1 January 2013 to-date.

Key financial highlights

·; Capital expenditure on infrastructure and drilling amounted to US$149 million for 1H 2013 (1H 2012: US$208 million);

·; Group's cash balance (net of abandonment and decommissioning funds) as at 30 June 2013 was US$1,651 million (31 December 2012: US$1,737 million).

Dr Abdul Jaleel Al Khalifa, CEO, commented:

"I am pleased to report solid production performance in the first half of this year. With six wells completed, including one sidetrack, and stable performance from the existing wells, we have achieved a 15% growth in average gross field production compared with the corresponding period last year. We re-iterate our 2013 production growth target at the lower end of the medium-term guidance of 10-15%.

"We are pleased to advise that we have signed an MOU with BKE Shelf for the use of jack-up drilling capacity for a total period of three years starting from 3Q 2013. The currently employed platform-based and jack-up rigs will continue to drill throughout the year and we endeavour to put more rigs on stream when they arrive in the Cheleken Contract Area. The Caspian Driller has been moved to a ship yard in Kazakhstan where it is scheduled to undergo final completion and preparation for commissioning with expected arrival towards the end of the year. One of the contracted platform-based rigs will commence drilling in 4Q 2013 in the Dzhygalybeg (Zhdanov) A platform area; while the other rig is expected to be delivered in 1Q 2014.

"Drilling is ongoing in the Bargou Exploration permit and we are close to reaching the target depth at which point an evaluation and a decision to conduct a production test will be made. The aim of this complex well is to test the flow potential of the reservoir. We look forward to seeing test results from the Bargou Exploration Permit in 3Q 2013."

OPERATIONAL UPDATE

Turkmenistan

Production and Entitlement

For 1H 2013, the gross field production averaged 73,600 bopd (1H 2012: 64,200 bopd) at observed temperature representing an increase of 15% over the comparable period. With six wells, including one sidetrack, completed as well as the introduction of an artificial lift in two wells, the average production from the existing and new wells has been holding steadily at above the December 2012 exit rate of 73,500 bopd.

The entitlement production for 1H 2013 was approximately 44% (1H 2012: 49%) of the gross production. 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. Entitlement barrels in 1H 2013 resulting from operation of the fiscal terms of the Production Sharing Agreement are lower due primarily to slower than expected development spend, despite lower realised crude oil prices.

Marketing

Dragon Oil sold 5.7 million barrels of crude oil in 1H 2013 (1H 2012: 5.8 million barrels). The 2% decrease in the volume sold over the comparable period is due to lower entitlement and change in the lifting position.

In 1H 2013, Dragon Oil exported 100% (1H 2013: 100%) of its crude oil production through Baku, Azerbaijan.

On 17 January 2013, Dragon Oil announced that the Group had reached a two-year agreement with Socar Trading for the sale of the full volume of our export entitlement production via Baku, Azerbaijan, until 31 December 2014, FOB (free-on-board) the Aladja Jetty.

Drilling

During the first six months of 2013, Dragon Oil has completed six wells, including one sidetrack, in the Dzheitune (Lam) field. The following table summarises the results of this drilling programme:

The jack-up rig has been mobilised to the Dzheitune (Lam) C platform where it is currently drilling the Dzheitune (Lam) C/183 well. The leased platform-based rig ("Land Rig 1") is being mobilised to the Dzheitune (Lam) 22 platform to commence drilling the Dzheitune (Lam) 22/184 well in September 2013 after completion of maintenance.

The Caspian Driller jack-up rig ("The Caspian Driller") has been moved to a ship yard in Kazakhstan where it is undergoing completion and preparation for commissioning, which are expected to take up to three months. Following commissioning, the Caspian Driller is due to be mobilised to the Cheleken Contract Area at the end of 2013 with drilling expected to commence in 1Q 2014. The timing of the arrival of the rig will be confirmed later in the year dependent on the progress with the completion of the rig.

One of the platform-based rigs ("Land Rig 2") secured for drilling in the Dzhygalybeg (Zhdanov) field is due to arrive in the Cheleken Contract Area towards the end of 3Q 2013 and is expected to commence drilling shortly after. The delivery of the other platform-based rig ("Land Rig 3") is being delayed on the contractor's side and is currently expected in 1Q 2014 with drilling to commence in mid-2014.

Dragon Oil has recently signed a memorandum of understanding (MOU) with BKE Shelf to contract for the use of jack-up drilling capacity in the Caspian Sea for a total period of three years. The Neptune drilling rig is expected to be available in 3Q 2013 and will be used for nine months; the Mercury drilling rig is anticipated to be available in 4Q 2014 and will be used for the remainder of the term.

We have started using an artificial lift on two wells in the Dzheitune (Lam) area and have seen encouraging results. Our intention is to do a more detailed engineering design study in the near future for a wider implementation.

Pilot water injection has commenced on a permanent basis at the Dzheitune (Lam) 75 platform and we anticipate to see the initial results in the next six months. Injection on the Dzheitune (Lam) 13 platform is expected to start in a few months. The long-term focus of the water flooding will be on the Dzheitune (Lam) main area.

Infrastructure

Installation of the Dzhygalybeg (Zhdanov) A platform is continuing with the platform expected to be ready for drilling in September 2013. Fabrication of the Dzhygalybeg (Zhdanov) B platform is ongoing and we are currently reviewing options for its future location.

Tendering processes to award contracts for the construction and installation of up to four wellhead and production platforms in the Dzheitune (Lam) field and associated pipelines are progressing. We anticipate the award of these contracts to take place in the second half of 2013 and early 2014. These platforms are expected to be constructed and installed in 2015 - 16.

The Group's plans to quadruple its crude oil storage capacity at the Central Processing Facility in anticipation of reaching the 100,000 bopd target in 2015 are progressing. The tendering process to select an engineering, procurement, installation and construction contractor is expected to conclude with the award of the contract in 3Q 2013. The tankfarm is anticipated to be constructed and commissioned in 4Q 2015 with a number of tanks built on a priority basis.

Dragon Oil has commenced a tendering process to select a contractor to build another 30-inch trunkline from one of the future platforms in the Dzheitune (Lam) field to the Central Processing Facility following the front end engineering design study completed in 2Q 2012. The purpose of the additional trunkline will be to transport oil and gas production onshore to accommodate production growth. The award of the contract is expected in 1H 2014.

The tendering process for an engineering, procurement, installation and construction project for the Gas Treatment Plant is ongoing with plans to award a contract in 4Q 2013.

Tunisia

Drilling in the Bargou Exploration Permit, offshore Tunisia, is ongoing with a near horizontal six-inch wellbore targeting vertical fractures. Drilling is expected to take a few more weeks to complete the remaining 500-600 metres through the upper part of the Abiod formation. Wireline logging will be run on the logging tool conveyed on the drill pipe after reaching the well's total depth to evaluate the sidetrack ahead of a potential decision by the Joint Venture partners (Cooper Energy, operator; Dragon Oil and Jacka Resources Limited) to conduct a production test.

High gas readings were reported at the start of the sidetrack; additional oil and gas shows have been also observed over a number of intervals recently. Ultraviolet fluorescence has been observed on the cuttings, which indicates the likely presence of oil. The high gas readings and oil shows observed on the cuttings coincide with features seen on the image logs from Login While Drilling, which probably indicate the existence of a fracture zone intersected by the well within this interval.

The well plan consists of a pilot hole (already completed) followed by a horizontal section to intersect the open fractures within the Abiod formation thereby testing the flow potential of the reservoir.

Dragon Oil is contributing 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). Based on the last revised cost plan the well cost is now estimated to be around US$45 million. Costs in excess of the cost cap will be shared among the joint venture partners pro rata to their participating interest.

FINANCIAL UPDATE

Capital expenditure

Capital expenditure for 1H 2013 was approximately US$149 million (1H 2012: US$208 million). Of the total capital expenditure, approximately 37% (1H 2012: 54%) was attributable to infrastructure with the balance spent on drilling including exploration expenditure in Tunisia. The infrastructure spend during the period included construction of the Dzhygalybeg (Zhdanov) A and B platforms, additional slots on the Dzheitune (Lam) 21 and 22 platforms.

Realised prices

The average realised crude oil price during the first half of 2013 was approximately US$86/bbl (1H 2012: US$102/bbl), at a provisional discount of 20% (1H 2012: 10%) to Brent. Our previous guidance on the discount to Brent has been revised in light of the fact that the pricing period is not aligned with the reporting period under the current arrangement and we now expect that the realised crude oil prices to range between a 16% and 21% discount to Brent. The previous guidance on the level of the discount related mainly to a discount in a flat oil price environment. If the present recovery of crude oil prices continues we expect the actual discount in the period to be lower at around 18% to Brent.

OTHER EVENTS

Board change

On 2 March 2013, Nigel McCue stepped down from the Board of Directors of the Company. Mr McCue had served on the Board of the Company for more than 10 years having been appointed in April 2002. He had also served as the Senior Independent Non-executive Director. Thor Haugnaess has temporarily assumed the role of Senior Independent Non-executive Director. The Board is searching for an additional Independent Director.

OUTLOOK

For 2013, the updated target is to put into production a total of 12 wells, including two sidetracks of existing wells. This is due to delays with the delivery of two platform-based rigs and the Caspian Driller. Six wells, including one sidetrack, have already been competed to-date with another six wells to be put into production by the end of the year. The remaining wells will be drilled by Land Rig 1 (one well), the jack-up rig (four wells) and Neptune jack-up rig (one well) on the Dzheitune (Lam) 22, C and 21 platforms, respectively. Land Rig 2 is expected to spud a well from the Dzhygalybeg (Zhdanov) A platform in 4Q 2013, which is likely to be completed early in 2014. The Caspian Driller and Land Rig 3 are expected to commence drilling in 1Q 2014 and mid-2014, respectively.

Having seen solid performance from the existing wells and taking into account forecast production from the future wells that remain to be completed in 2013, we reiterate our guidance of average gross production growth at the lower end of the medium-term growth rate range of 10% to 15% for 2013.

We maintain our medium-term guidance over the 2012-15 period of average gross production growth of 10% to 15% per annum, taking our gross field production to the target level of 100,000 bopd in 2015 and maintaining this plateau for a minimum period of five years.

The Group expects to report its 2013 Interim financial results on 6 August 2013.

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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-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.