Dragon Oil Interim Results 2011

Doug Robson — August 10, 2011

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Dragon Oil plc (Ticker: DGO), an international oil and gas development and production company, today announces its interim financial and operational results for the period ended 30 June 2011.

Operational performance

Growth of 25% in the average gross production to approximately 58,000 bopd (1H 2010: 46,420 bopd) achieved in 1H 2011;
Eight new development wells completed to date (including one well from the 2010 drilling campaign);
2011 drilling programme increased to comprise 12 wells, plus one sidetrack and one workover, versus 11 wells previously stated; and
The contract for the construction of the Dzhygalybeg (Zhdanov) B platform awarded.

Outlook for 2H 2011

Production growth target for 2011 of up to 20%;
Five development wells, one sidetrack and one workover remain to be completed by the year-end;
Dzheitune (Lam) Block 1 to be commissioned within a few weeks; Dzheitune (Lam) C platform due in 4Q 2011; and
Interim dividend of 9 US cents announced.

Outlook for 2011-13

Maintain target of average annual production growth in the range of 10% to 15%;
Super M2 jack-up rig to be delivered in 1Q 2012 to commence drilling in 2Q 2012;
Dzhygalybeg (Zhdanov) A platform expected to be installed towards the end of 1Q 2012;
Award contracts for another two wellhead and production platforms;
Lease a 3,000 hp land rig for offshore operations;
Active and focused search for suitable acquisition assets; and
Dual strategy for gas monetisation explored.

Dr Abdul Jaleel Al Khalifa, Chief Executive Officer, commented:

“We continue to successfully ramp up production from the Cheleken Contract Area, which in the first six months of this year increased by 25% over the corresponding period in 2010. With five more wells to be completed by the end of the year plus a sidetrack and the workover of an existing well, we are set to achieve strong production growth over last year.

The first six months of 2011 were also a record in terms of revenues generated: the best ever result over comparable periods due to the continued strong production growth and high realized oil prices.

On the gas monetisation front, we are looking at a dual strategy, which would involve a short-term agreement, reflecting the current weak global gas demand, and then a long-term agreement more in line with gas export marketing.

We remain prudent in our M&A strategy and only target those opportunities that offer value-adding diversification and growth potential.”

Source www.dragoil.com