23rd Apr 2007 13:03
Dragon Oil PLC23 April 2007 23 April 2007 PRESS RELEASE DRAGON OIL plc Dragon Oil Plc ("Dragon Oil") TRADING AND OPERATIONAL UPDATE Dragon today issued the following trading and operational update for the firstquarter of 2007. Q1 2007 Highlights • Average Q1 2007 production of 26,943 barrels of oil per day ("bopd"),a 56% increase over the average production for Q1 2006. • Two jack-up rigs deployed throughout the quarter. • Two development wells completed, with a further development well andan appraisal well on the LAM West structure nearing completion. • Mobilisation of the platform-based rigs continues on track, with theCIS-1 rig expected to be mobilised in Q2 2007 and Dragon Oil's own Rig 40expected to be deployed in the second half of the year. • Infrastructure development programme also on track, with the 50,000bopd processing facility now fully functional. New in-field sub-sea pipelinesscheduled for completion in Q2 2007 and the first phase of Dragon Oil's exportjetty upgrade is almost complete. • Hedges using collars were executed for the period up to 31 December2007 covering 3.7 million barrels of oil on a zero cost basis. Hussain Sultan, Chairman & CEO, commented: "Our strategy, which I outlined to investors in our update in March this year,is progressing as planned and we have made good progress on all fronts duringthe first few months of the year. We expect to consolidate and improve production levels over the remainder of theyear. Rig deployment, production optimisation and progress on infrastructuredevelopment are critical to our plans for the remainder of the year and we areoptimistic that we can achieve the ambitious targets we have set for ourselves."Enquiries:Citigate Dewe Rogerson +44 207 638 9571 Media enquiries: Martin Jackson Analyst enquiries: Nina Soon Trading and Operational update Production and marketing Gross field production for Q1 2007 was 2.4 million barrels of oil (Q1 2006: 1.6million barrels) or an average of 26,943 bopd (Q1 2006: 17,260 bopd). Of this,19,960 bopd was attributable to Dragon Oil (Q1 2006: 12,317 bopd). Averagerealised price in Q1 2007 was US$55.70 per barrel (Q1 2006: US$57.09 perbarrel). 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. InFebruary 2007, Dragon Oil hedged 3.7 million barrels of oil up to 31 December2007, on a zero cost basis, by using collars. The average floor per barrel forthe collar was US$45 and the average ceiling was US$86. Drilling and workover Two development wells have been completed in Q1 2007: Well 21/117, was completedusing the Iran Khazar jack-up rig and the other, well 13/118, was completedusing the Astra jack-up rig. In addition, well 10/51, was successfullyworked-over in Q1 2007 using a hydraulic workover unit. Current operations and outlook The Iran Khazar rig has completed a further development well, well A/119, fromthe LAM A platform. This well has been drilled to its final depth of 4,268metres. Following a brief inspection of the rig, the Iran Khazar rig willcommence perforating and testing of the well, before skidding over to drill afurther development well from the same platform. The Astra rig has completed Dragon Oil's first appraisal well, well 28/120, fromthe LAM 28 platform. This well has been drilled to its final depth of 3,926metres and has been completed using a monobore completion system. Perforatingand testing operations will be under way soon and results are expected to followshortly. The results will be used to evaluate the potential for commercialhydrocarbons in this part of the Cheleken Contract Area. Dragon Oil advised in a press release dated 5 March 2007 that it had been unableto put the lower zones of well 21/117 on production due to a downholeobstruction. Now that well 28/120 has been completed, the Astra rig has beenmoved to the LAM 21 platform where it has commenced the workover of well 21/117which it will complete before departing from the Cheleken Contract Area. Mobilisation of the two platform-based rigs is on schedule. The CIS-1 rig willbe mobilised shortly to the LAM 22 platform from which it will drill a series ofdevelopment wells and the Rig 40 is expected to be deployed later in the secondhalf of the year. Workover operations are in progress on the LAM 10 platform on well 10/51 usingthe hydraulic workover unit. The workover programme will be extended to otherwells and will continue throughout 2007. Dragon Oil successfully commissioned the onshore processing facility in Q1 2007and has initiated a major infrastructure development programme. The Companyexpects to announce the installation of a number of new in-field flow lines inthe coming months. 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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