Dragon Oil plc: 2013 Interim Results

Dragon Oil plc, an international oil and gas exploration, development and production company, today announces its interim financial and operational results for the period ended 30 June 2013. These results are prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

Financial highlights

Operational Performance

·            Average gross production growth of 15% to approximately 73,600 bopd (1H 2012: 64,200 bopd)

achieved in 1H 2013;

·            Six development wells completed to-date;

·            Water injection pilot project commenced at the Dzheitune (Lam) 75 area;

·            Artificial lift system successfully introduced in two wells;

·            Revenue was lower by 16% due to lower realised crude oil price of US$86/barrel;

·            Testing of the Hammamet West-3 well in the Bargou Exploration Permit is due to commence imminently.

Corporate and Commercial Developments

·            Interim dividend of 15 US cents per share announced;

·            Marketing route secured via Baku, Azerbaijan until 31 December 2014.

Outlook for 2H 2013

·            Production growth target for 2013 re-iterated at the lower end of the medium-term range of 10 to 15%;

·            Further six wells, including one sidetrack, expected to be completed by the year-end to drill a total of

12 wells, including two sidetracks;

·            Drilling from the Dzhygalybeg (Zhdanov) A platform expected to commence in 4Q 2013;

·            Award contracts for construction of a number of wellhead and production platforms, the Gas Treatment

Plant and expansion of the crude oil storage capacity;

·            Negotiations with the Afghanistan Ministry of Mines and Petroleum for activities in two blocks expected

to conclude in 3Q 2013.

Outlook for 2013-15

·            Maintain the target of average annual production growth in the range of 10% to 15% over 2013-15 with

growth rate in 2014 and 2015 of around 15%;

·            The Dzhygalybeg (Zhdanov) B platform expected to be installed in 2014;

·            Award contracts for the construction of wellhead and production platforms and another 30-inch trunkline;

·            Consortium in Iraq’s Block 9 to secure a drilling rig to enable the spudding of an early well.

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

“I am pleased to report solid gross production growth in the first half of this year, at a healthy 15% compared to the corresponding period last year. Financial results for the first half of this year reflect the impact of slower than expected progress on the awarding of infrastructure projects and a revised pricing structure under the current crude oil marketing agreement. In 2H 2013, we expect to award a number of contracts for the construction of platforms and the Gas Treatment Plant. We also monitor closely alternative marketing routes and engage with market participants with an aim to diversify future export routes.

“A production test of the Hammamet West-3 well is due to commence soon in the Bargou Exploration Permit, offshore Tunisia with initial results to be available shortly thereafter. In Iraq, the consortium is undertaking necessary work to secure a drilling rig to spud an early well. In Afghanistan, we hope to conclude the negotiations in 3Q 2013 and sign the contract for the two blocks with our partners.

“The Board is pleased to announce an interim dividend of 15 US cents. This testifies to the Board’s confidence in the Group’s performance and strong financial position.”

Source