25th Jul 2006 12:18
Dragon Oil PLC25 July 2006 25 July 2006 Dragon Oil Plc ("Dragon") Trading and Operational Update Dragon today issued the following trading and operational update in respect ofits performance in 2006 to date. The information herein has not been audited andis subject to further review. Dragon expects to publish its financial resultsfor the six months to 30 June 2006 in September 2006. Highlights • Average gross 1H 2006 production: 18,576 barrels of oil per day (' bopd') (1H 2005: 19,533 bopd) with 13,444 bopd (1H 2005: 14,044 bopd) attributable to Dragon. • Lower production in 1H 2006 was primarily due to a pipeline blockage in late January. Production was restored in April. • Development wells: two completed, one in progress. • Workovers: four completed, one in progress. • Cash balance: on 30th June, was US$265.4 million (31st December 2005: US$245 million). • Higher weighted average sales price of US$61.1 per barrel during 1H 2006 (1H 2005: US$43.6 per barrel). Outlook • Mobilisation of second jack-up drilling rig planned for Q3 2006. • Three additional development wells planned to be completed in 2H 2006. • One exploration / appraisal well planned to be spudded by the year end. • Refurbishment of Dragon's drilling rig for commencement of platform-based drilling operations in early 2007. • Continuing workover programme, with rigless operations and one hydraulic workover unit ('HWU'). • Install and make ready LAM 'A' wellhead and production platform for drilling. • Install and commission new onshore oil processing facility ('NPF'). Hussain Sultan, Chairman & CEO commented: "Dragon has had a challenging first half of 2006, with notable successes offsetby some early operational difficulties. In the second half of the year, Dragonwill have two jack-up rigs operating concurrently for the first time and thiswill go a long way to achieving our stated goal of accelerating the fielddevelopment plan and consequently, driving up production."Enquiries:Dragon Oil plc (+971 4 3053600) Citigate Dewe Rogerson +44 207 638 9571 Hussain M. Sultan, Chairman & Chief Executive Officer 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 1H 2006 was 3.4 million barrels of oil and theaverage gross production for the half-year was 18,576 bopd with 13,444 bopdattributable to Dragon. This compares to 3.5 million barrels of oil in 1H 2005which had a total gross production of 19,533 bopd, of which 14,044 bopd wasattributable to Dragon. The weighted average sales price in 1H 2006 was US$61.1per barrel (1H 2005: US$43.6 per barrel). Lower production in 1H 2006 was primarily due to a blockage in the pipelinebetween the LAM 22 well head platform and the Block 2 riser platform in lateJanuary 2006. Dragon restored the production from the LAM 22 platform in April2006. Dragon to date has not hedged the oil price, however the company's managementwill continue to review this on a regular basis during the year. Drilling and workover Two development wells have been drilled and completed from the upgraded LAM 10platform in 2006 using the Iran Khazar jack up rig and four wells have beenworked over from 3 other platforms. Well LAM 10/113 was spudded on 29th December 2005 and drilled to a total depthof 3,753 m from the refurbished LAM 10 platform and tested oil from multiplereservoir Zones at a combined rate of 3,453 bopd. The second well, LAM 10/114,was spudded on 13th March 2006 (also from the LAM 10 platform) and put onproduction, with a combined rate of 1,700 bopd from multiple Zones. Wells Zhdanov 21/53, Zhdanov 60/68, Zhdanov 21/51 and Zhdanov 60/66 were allworked over as part of the workover programme. Well Zhdanov 21/53 was completedand tested at an initial rate of 214 bopd. Well Zhdanov 60/68 was completed andtested at an initial rate of 515 bopd. Well Zhdanov 21/51 was completed andtested at an initial rate of 656 bopd. Finally, well Zhdanov 60/66 wascompleted and tested at an initial rate of 350 bopd. All the worked over wellswere shut-in prior to workover operations and are now on production. Current operations and outlook The Iran Khazar jack-up rig is drilling the sixth well from the LAM 10 platform,LAM 10/115. The well has a target depth between 3,700 and 4,300 meters.Following completion of well LAM 10/115, the Iran Khazar jack-up rig isscheduled to complete another development well by the end of this year. The Astra jack-up rig is also on schedule to commence drilling operations andcomplete a development well from the LAM 13 platform. Following completion ofthat well, Dragon intends to use the Astra jack-up rig to commence drilling ofan exploration / appraisal well from the LAM 28 platform on the LAM Weststructure before the year end. In addition, Dragon is planning to refurbish the drilling rig that it owns, forcommencement of platform-based drilling operations in 2007. Further, workoveroperations are in progress on well LAM 86/86 using a HWU. The workoverprogramme will continue with rigless operations and the HWU. Significant progress has also been made on execution of two major contracts,namely the LAM 'A' wellhead and production platform and the onshore new processfacility. By the end of the year, The LAM 'A' platform will be installed andmade ready for drilling and the NPF will be installed and commissioned. The NPFwill provide a processing capacity of up to 50,000 bopd. Tendering andengineering work is also progressing and is complete to different stages onadditional wellhead and production platforms, refurbishment of the crude oilexport jetty, refurbishment and upgrading of existing platforms for drilling 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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