Dragon Oil plc has announced its preliminary results for the year ended 31 December 2006. Dragon Oil's producing asset is in the Cheleken Contract Area, in the eastern section of the Caspian Sea, offshore Turkmenistan. These preliminary results are prepared in
accordance with the International Financial Reporting Standards ('IFRS').
--Operating profit for the year of US$212m (2005: US$163m), a 30% improvement over 2005.
--Profit for the year of US$180m, a 70% improvement over 2005.
--Net cash generated from operating activities of US$222m, a 17% improvement over 2005.
--Basic earnings per share for the year of US Cents 35.4, a 57% improvement over 2005.
--Cash balance of US$296m and no debt at 31 December 2006.
--Average gross production of 20,514 bopd during the year, 6% higher than in 2005 (2005: 19,426 bopd), of which 15,115 bopd (2005: 14,008 bopd) was attributable to Dragon.
--Four development wells drilled and completed and thirteen wells successfully worked over during 2006.
Mr Hussain M. Sultan, Chairman, commented:
"Dragon has had another year of good financial and operational performance.
The Company has made improvements during the year on many fronts and the
continuous development program, including the workover program, is now
showing results. Our infrastructure upgrade plans are progressing well and the
commissioning of the new LAM A platform and the completion of the New Processing
Facility are significant achievements. Successful delivery of these projects
demonstrate Dragon Oil's ability to deliver large projects in circumstances
which are logistically and operationally challenging. The New Processing
Facility is a particularly significant development for the Company because this
gives the Company improved control over the quality and quantity of crude
"During 2007, Dragon Oil will continue its accelerated field development
program with a view to sustaining and improving production levels and broaden
its horizons into other, new business ventures."
- January-April 2006: the Company suffers the effects of a blocked, in-field pipeline, resulting in a temporary, reduced production capacity.
- February 2006: repayment of the European Bank for Reconstruction and Development loan facility.
- September 2006: the Astra jack-up rig commences drilling with the result that, for the first time, Dragon Oil has two rigs operating concurrently.
- November 2006: Dragon Oil contracts a third rig to drill in the Cheleken Contract Area, the platform-based CIS-1 rig, and the rig is moved to the Cheleken Contract Area.
- December 2006: the Company announces the commissioning of its first, new wellhead platform, LAM A.
- March 2007: the New Processing Facility is commissioned and the first oil flows into this processing facility.
- March 2007: the contract for the Iran Khazar jack-up drilling rig is extended for at least a further two years.
CURRENT OPERATIONS AND OUTLOOK
- The Company will embark on a three-rig development program, which
will include deployment of one jack-up rig and two platform-based rigs,
which will commence drilling at different times in 2007. In addition,
during the first quarter of 2007, the Astra jack-up rig has drilled a
development well, well 13/118, and is drilling an appraisal well, well
28/120, on the LAM West structure, prior to its departure from the region.
- The Company's field development plan envisages the drilling of up to
25 development and appraisal wells between 2007 and 2009, subject to rig
availability. The Company anticipates for this to result in an approximate
25% year-on-year increase in daily crude oil production.
- The Company expects to spend in the region of US$500m between 2007 and
2009 on infrastructure development, which includes several new production
platforms, upgrade of offshore facilities, new pipelines and enhanced export
- The Iran Khazar jack-up rig will drill a series of development wells
from the LAM A platform in the current year.
- Mobilization of the platform-based CIS-1 drilling rig is under way and
the rig is expected to commence drilling in the second quarter of 2007.
- Dragon Oil's own platform-based Rig 40 drilling rig is also in the
process of refurbishment and it is planned to commence drilling in the
second half of 2007.
- The workover program will continue throughout 2007, using the
snubbing unit and the wireline units.
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