Central Asia and Middle East-focused Dragon Oil boosted its average production by 10 percent in 2012 to approximately 67,600 barrels of oil per day (bopd), compared with 2011.
In a trading update to the London Stock Exchange, where its stock is quoted, Dragon said that, in spite of sand control issues in the second quarter of 2012 at its only producing asset in Turkmenistan, it had managed to boost production to above 70,000 bopd by mid-August and to 73,500 bopd in December. Meanwhile, the firm managed to put 15 new development wells into production during the year – meeting its target of 13-15 wells in 2012.
"Every year brings new challenges. In 2012, it was the sand control issues that we had to handle on an immediate basis. However, having mobilized all the necessary resources, procured and installed the required sand screens, we were able to restore production to normal levels and achieve a credible 10-percent increase in the average gross production. We have learnt from this experience. It is a success story for us to have been able to deal with the problem and to grow production beyond that impact."
Dragon CEO Dr. Abdul Jaleel Al Khalifa commented in a statement.
"The intensive drilling campaign conducted last year contributed to the production growth and, for a third year in a row, to the upgrade of oil and condensate 2P reserves. Besides the 10-percent production growth, we achieved an organic replacement of produced reserves of 180 percent."
Dr. Jaleel Al Khalifa also commented on efforts by Dragon to diversify its portfolio outside of Turkmenistan during 2012.
"We are pleased with the progress made to diversify our portfolio by adding Block 9 in Iraq within a consortium of companies and by being selected as the winning bidder for two blocks in Afghanistan, again in a consortium with other companies. We are confident that we will continue to add assets to become a growing multi-asset exploration, development and production company."
Dragon confirmed that its Bargou joint venture – in which it holds a 55-percent stake – has secured a drilling rig from Grup Servicii Petroliere fir the drilling of an exploration well in the Bargou Exploration Permit offshore Tunisia.
Dragon added that it plans to achieve a gross production increase in 2013 of between 10 and 15 percent and that it plans to drill up to 55 wells over the next three years. By 2015 the firm aims to take its gross field production to a level of 100,000 bopd.
Oil sector analysts at London-based FoxDavies Capital described 2012 as an "impressive year for Dragon Oil". In a research note published following the update on Tuesday, FoxDavies added that since Dragon has around $1.7 billion in cash and that cash generation is strong, the firm's potential to make acquisitions "is significant".
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