17th Jan 2007 15:35
Dragon Oil PLC17 January 2007 Dragon Oil Plc ("Dragon") TRADING AND OPERATIONAL UPDATE Dragon today issued the following trading and operational update. The update isaimed at providing estimates for the year ended 31 December 2006. All datareferred to in this update are provisional and unaudited. Dragon expects topublish its 2006 preliminary financial results in early March 2007. Highlights Operational and financial • 6 % increase in 2006 gross production over 2005, with an average of 20,514 bopd. • 21% increase in gross 2H 2006 production over 1H 2006, with an average 2H 2006 production of 22,421 bopd. • Gross end of year production for 2006 of 27,353 bopd (end of year 2005: 20,230 bopd). • Average realised prices per barrel in 2006 US$ 61.3 compared with US$ 48.6 in 2005. • Cash balance of US$ 296 million at 31 December 2006. • 4 development wells completed during the year (2005: 3 wells) • 13 workovers completed in 2006 (2005: 7 wells) • Major projects commissioned or near completion; the LAM A production platform commissioned in Q4 2006, the New Processing facility due for commissioning in Q1 2007, various new sub-sea pipelines and upgrading of old platforms. Outlook • Accelerated development programme for 2007 subject to rig availability. • Continuing workover programme, with rigless operations and hydraulic workover unit • Significant further infrastructure renewal and upgrade in Cheleken Hussain Sultan, Chairman & CEO commented: "Increasing development activity, improving production and building ourinfrastructure for the future have been our main focus in the second half of2006. The Company's production levels continue to increase and I am optimisticthat we can consolidate on these improvements in 2007".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 The total field production from the Cheleken Contract Area, in the Caspian Sea,offshore Turkmenistan, for 2006 was 7.5 million barrels of oil while the averagegross production for the year was 20,514 barrels of oil per day (bopd), with15,115 bopd attributable to Dragon. This compares to 7.1 million barrels of oilin 2005 or an average gross production of 19,426 bopd, of which 14,008 bopd wasattributable to Dragon. The average sales price in 2006 was US$ 61.3 per barrel(2005: US$ 48.6 per barrel). Drilling and workover Four development wells have been completed during 2006, three from the upgradedLAM 10 platform and one from the refurbished LAM 13 platform. Three of thesewells were completed using the Iran Khazar jack-up rig and one well wascompleted using the Astra jack-up rig. The LAM 10 wells 113/114/115 tested oilat combined initial rates of 3,453, 1,700 and 1,370 bopd respectively while LAM13/116 tested oil at a combined initial rate of 2,501 bopd. In addition, 13 wells have been worked over from 8 platforms using a combinationof rigless wireline and hydraulic workover operations. The workover programmewas successful and achieved incremental production in excess of 6,000 bopd. Current operations and outlook The 'Iran Khazar' is in the process of completing a further development wellfrom the LAM 21 platform, 21/117. This well has been drilled to a depth of4,245 metres. On completion of this well, the 'Iran Khazar' is expected tocommence drilling the first in a series of development wells from the new LAM Aplatform. The 'Astra' is in the process of drilling a second development well from the LAM13 platform, 13/118. The 'Astra' has to date reached a drilling depth of 2,162metres. Following completion of this well, the Astra jack-up rig is expected tocommence drilling an exploration/appraisal well from the LAM 28 platform on theLAM West structure, prior to its scheduled departure from the Cheleken ContractArea in April 2007. In addition, the Company is planning to use platform-based drilling rigs in itsoperations offshore Turkmenistan. A contract was signed for the 'CIS-1'platform-based rig, which will be mobilised to the LAM 22 platform from which itwill drill a series of development wells. The Company is also planning torefurbish its own drilling rig, Rig 40, for the commencement of drillingoperations in 2007. Workover operations are in progress on the LAM 10 platform on well 10/53 usingthe hydraulic workover unit. The workover programme will continue into 2007with both the hydraulic workover unit and wireline units. Significant progress was made in 2H 2006 on execution of two major contracts,namely the LAM 'A' wellhead and production platform and the onshore 50,000 bopdNew Processing facility. The Company successfully commissioned the new LAM 'A'wellhead and production platform prior to the end of 2006 and it is now readyfor drilling.. The new processing facility will be commissioned in Q1 2007. The Company has initiated a major infrastructure development programme, whichincludes additional wellhead and production platforms, refurbishment of thecrude oil export jetty, refurbishment and upgrading of existing platforms andinstallation of new in-field flow lines. 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 information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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