16th Jan 2008 07:00
Dragon Oil PLC16 January 2008 DRAGON OIL plc ("Dragon Oil" or the "Company") Trading and Operational Update Dragon Oil (DGO) issued the following trading and operational update for theyear ended 31 December 2007. All information referred to in this update isunaudited and subject to further review. Dragon Oil expects to publish its 2007preliminary financial results on 5th March 2008. Highlights Operations and Production 56% increase in 2007 gross production over 2006, with an average rate of 31,997barrels of oil per day ("bopd") compared to 20,514 bopd in 2006 Average 2H/07 production of 35,613 bopd up from 28,321 bopd in 1H/07, anincrease of 26% A record exit production for 2007 of 40,038 bopd (2006: 27,353 bopd). 6 development and 1 appraisal wells completed in 2007 (2006: 4 wells) 6 workovers successfully completed in 2007 adding 2,000 bopd to production Commissioning of LAM A Platform and 50,000 bopd onshore processing facility Dzheitune (Lam) 22/124 well was completed in January 2008 with initialproduction from the two strings of 2,414 bopd. Further optimisation to becompleted. Strategy and Outlook Accelerate 2008 development programme subject to rig availability Significant infrastructure renewal and upgrade ongoing in Cheleken Ongoing discussions and facility planning for gas utilisation andcommercialisation Exploration drilling ongoing in Yemen following the December 2007 farm-inagreement Pursue value-adding assets, further diversifying Dragon Oil's portfolio Hussain M. Sultan, Chairman and CEO of Dragon Oil, commented: "Dragon Oil has delivered a strong overall performance in 2007 highlighted byexceeding our peak production target of 40,000 bopd ahead of plan, furtherstrengthening the field infrastructure and taking a first important step in ourplanned geographic diversification. I am also pleased to report that the CIS 1Rig has completed the LAM 22/124 well which is in line with our strategy tobring into operation additional rigs in 2008. I hope to see Dragon Oil raiseproduction by an additional 25% by the end of 2008, and I am confident that wecan continue to capitalise on this success to drive future growth and increaseshareholder returns." Trading and Operational update Production and marketing Total 2007 gross field production from the Cheleken Contract Area was 11.7million barrels of oil with an average 2007 gross production of 31,997 bopd.This compares to 7.5 million barrels of oil in 2006 and an average grossproduction of 20,514 bopd. The average sales price in 2007 was US$ 70.9 perbarrel (2006: US$ 61.3 per barrel). Dragon Oil hedged 3.7 million barrels of 2007 production and 3.8 million barrelsof 2008 production on a zero cost basis, by using collars. Dragon Oil has metits obligations for the November and December 2007 hedged quantities. TheCompany will continue to review its hedging strategy in the light of marketconditions. Drilling and workover Six development wells were completed during 2007, one from the upgradedDzheitune (Lam) 13 platform (L13/118), one from the upgraded Dzheitune (Lam) 21platform (L21/117) and four from the new Dzheitune (Lam) A Platform (LA/119, LA/121, LA/122 and LA/123). In addition, one development/appraisal well has beendrilled from the upgraded Dzheitune (Lam) 28 platform (L28/120). The L28/120well proved the presence of hydrocarbons and a high quality reservoir in theDzheitune (Lam) West area and was completed as a producer. In addition, six wells have been worked over from two platforms using acombination of rigless wireline and hydraulic workover operations. The workoverprogramme was successful and achieved incremental production in excess of 2,000bopd. Two major projects were completed, namely the Dzheitune (Lam) 'A' wellhead andproduction platform that was commissioned in 4Q 2006, as well as the 50,000 bopdonshore New Processing Facility ("NPF") which accepted first oil in March 2007. Current operations and 2008 outlook Turkmenistan The 'Iran Khazar' rig is now drilling the fifth development well from theDzheitune (Lam) A platform, LA/125, which is scheduled to be completed in March2008. This well has a target depth of 4,390 metres. The CIS 1 Rig completed theDzheitune (Lam) 22/124 well on 9th January 2008 with initial production from thetwo strings of 2,414 bopd with optimisation of the well to follow. The CIS Rigis preparing to drill its second development well, L22/126. In addition, theCompany is continuing to refurbish its own drilling rig, Rig 40, for thecommencement of drilling operations from the refurbished Dzheitune (Lam) 13Platform. Dragon Oil continues the major infrastructure development programme, whichincludes the construction of additional wellhead platforms, expansion of theNPF, refurbishment of the crude oil export jetty and continued upgrade ofexisting infrastructure. In line with its commitment to commercialise the gas resources within theCheleken Contract Area, Dragon Oil has completed feasibility and design studies.Subject to the necessary approvals, the Company plans to install new offshoreand onshore facilities, which will include a 30-inch offshore trunk pipeline totransport the gas and oil onshore. Discussions with the Government ofTurkmenistan are ongoing. Yemen An exploration drilling programme on our non-operated acreage in Yemen iscurrently underway with drilling taking place in Blocks 49 and R2. Drilling willcommence on additional prospects in Block 35 once drilling has been completed inBlocks 49 and R2. Background Note Dragon Oil Plc is an innovative international oil and gas development andproduction company, quoted on the London and Irish Stock exchanges (Tickersymbol: DGO). Its principal producing asset is in the Cheleken Contract Area, inthe eastern section of the Caspian Sea, offshore Turkmenistan and recentlyacquired interests in Blocks 35, 49 and R2 (10%) in the Republic of Yemen. Dragon Oil (Turkmenistan) Ltd., a wholly owned subsidiary of Dragon Oil plc,holds 100% interest in and is the operator of the Production Sharing Agreementfor the Cheleken Contract Area in the Caspian Sea, offshore Turkmenistan.Operational focus is on the re-development of two oil producing fields,Dzheitune (Lam) and Dzhygalybeg (Zhdanov). www.dragonoil.com For further information please contact: Media enquiriesCitigate Dewe Rogerson (+44 20 7638 9571)Martin JacksonGeorge Cazenove Investor and Analyst enquiriesDragon Oil Plc (+971 4 305 3600)Leanne Denman, Investor Relations Officer Disclaimer This statement may contain forward-looking statements concerning the financialcondition and results of operations of Dragon Oil. Forward-looking statementsare statements of future expectations that are based on management's currentexpectations and assumptions and involve known and unknown risks anduncertainties that could cause actual results, performance or events to differmaterially from those expressed or implied in these statements. No assurancescan be given as to future results, levels of activity and achievements andactual results, levels of activity and achievements may differ materially fromthose expressed or implied by any forward-looking statements contained in thisreport. Dragon Oil does not undertake any obligation to publicly update orrevise any forward-looking statement as a result of new information, futureevents or other information. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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