Dragon Oil: Financial Results 2012 – Reserve Replacement at 180%
Dragon Oil, an international oil and gas exploration, development and production company, today announces its full-year results for the year ended 31 December 2012. These results are prepared in accordance with International Financial Reporting Standards as adopted by the European Union.
Key Operational and Corporate Highlights
Drilling
§ Fifteen wells completed during 2012 against an initial guidance of 13 to 15 wells;
§ Average gross daily production increased by 10% to 67,600 bopd;
§ Average daily production rate for the month of December 2012 was 73,500 bopd;
§ Two platform-based rigs are scheduled to commence drilling in the Dzhygalybeg (Zhdanov) area; and
§ The contract to continue the use of the currently deployed jack-up rig extended for another two years.
Corporate and Commercial Developments
§ 180% organic reserves replacement of 2P oil and condensate reserves;
§ 2012 year-end oil and condensate 2P reserves increased by 44 mn barrels to 677 mn barrels with oil and condensate contingent resources at 59 mn barrels; gas 2P reserves and contingent gas resources remained at similar levels of c. 3 TCF;
§ Marketing route for the full export volumes secured for two years to 31 December 2014;
§ Dragon Oil in a consortium of companies was awarded exploration Block 9 in Iraq; and
§ Dragon Oil in a consortium of companies was selected as the winning bidder for two exploration blocks in Afghanistan.
Financial Developments
§ The Board recommends the payment of a final dividend of 15 US cents per share for 2012; the full-year dividend for 2012 amounts to 30 US cents (2011: 20 US cents);
§ $200mn share buyback programme was undertaken in 2012 with 22.6 mn shares purchased and cancelled; and
§ Cash generating abilities remained strong: US$1bn was generated from operations during 2012.
Outlook for 2013-15
§ Expect to complete 13 to 15 wells and two workovers in 2013 and around 20 development wells per year in 2014 and 2015;
§ Target annual production growth at the lower end of the medium-term guidance of 10-15% on average per annum in 2013 and around 15% in 2014 and 2015;
§ Achieve the 100,000 bopd production target in 2015;
§ Drilling from the Dzhygalybeg (Zhdanov) A and B platforms due to commence in 2H 2013;
§ Plans to award a contract to build the Dzheitune (Lam) D and E platforms in 2013;
§ The Caspian Driller jack-up rig expected for delivery in mid-2013;
§ Perform water injection pilot projects at the Dzheitune (Lam) 75 and 13 areas;
§ US$1.5 billion estimated capital expenditure for infrastructure and drilling in 2013-15 in the Cheleken Contract Area;
§ Progress plans to build the Gas Treatment Plant; and
§ Actively pursue the diversification strategy.
Dr Abdul Jaleel Al Khalifa, CEO, commented:
“I am pleased to report once again strong financial and operational results for 2012. We sustained the over-US$1 billion level in revenues as a result of strong oil prices and growth in production and finished the year with the average December production of robust 73,500 bopd.
“The year was not an easy one for us. We faced sand control issues in certain wells in 2Q 2012, which temporarily reduced production rates. We mobilised our highly professional and experienced operational teams to tackle the challenge; the production quickly returned to the previous level.
“Two new platforms are being fabricated and will be installed in the Dzhygalybeg (Zhdanov) field – initiating a new phase in the Group’s drilling campaign in an area that last saw active drilling during the three decades before 2000. With more new platforms to be constructed for the Cheleken Contract Area, we are gearing up for continued intense drilling over the next few years as we progress towards our target of 100,000 bopd and prepare to maintain it for at least five years thereafter.
“On the diversification front, we had a good year having expanded our portfolio of exploration assets in two more countries, Iraq and Afghanistan, and we continue to look for further opportunities.
“2013 is promising to be an exciting year with the first drilling results from the Dzhygalybeg (Zhdanov) field, initial findings from the water injection project, exploration drilling in the Tunisian block, and the arrival of the Caspian Driller – major milestones that our team is ready to handle.”
