Dragon Oil Touts $1.1B Cash Balance in 1Q
Dragon Oil issued the Interim Management Statement in accordance with the EU Transparency Directive. The statement covers the period from January 1, 2010 to date. The financial and production data are for the period from January 1, 2010 to March 31, 2010. All other information, including details on operations, is up-to-date as at April 22, 2010.
This statement is solely for the purpose of providing information to the market and it should not be relied upon for any other purpose.
- The average daily production rate reached 47,654 barrels of oil per day ("bopd") in 1Q 2010, an increase of 9% over the comparable period in 2009 (1Q 2009: 43,787 bopd);
- Three development wells came on stream at combined rates of 2,103 bopd, 2,168 bopd and 1,895 bopd;
- Capital expenditure on infrastructure and drilling was approximately US $67 million for 1Q 2010 (1Q 2009: US $81 million);
- Financial position of the Group with a cash balance of US $1,104 million at the end of 1Q 2010 and with no debt remains strong.
Dr. Abdul Jaleel Al Khalifa, CEO, commented, "Dragon Oil continues to increase production. In 1Q 2010 we achieved a 9% increase in gross production compared to 1Q 2009. This year we have added workovers and sidetracks to our drilling program in addition to the objective of completing 11 development wells by year end. The infrastructure development program for the year is well underway along with the award of two production platforms Dzheitune (Lam) C and Dzhygalybeg (Zhdanov) A. We continue to drive our gas monetization and diversification strategies."
Iran Khazar rig completed the Dzheitune (Lam) A/142 well in 1Q 2010, which was drilled to a depth of 3,961 meters. The well tested at a combined rate of 2,103 bopd with the short string contributing 1,180 bopd and the long string contributing 923 bopd. Subsequently, as part of the workover program, the Iran Khazar rig completed a work-over of the well Dzheitune (Lam) A/125 yielding an incremental production of 562 bopd. The Iran Khazar rig is preparing to commence sidetrack of well Dzheitune (Lam) A/129 that is expected to be completed by June 2010.
Rig 40 completed the Dzheitune (Lam) 13/143 well in 1Q 2010, which was drilled to a depth of 3,450 meters. The well tested at a combined rate of 2,168 bopd with the short string and the long string contributing 1,144 bopd and 1,024 bopd respectively. Rig 40 has since been skidded to the next slot on the Dzheitune (Lam) 13 platform where it has commenced drilling the Dzheitune (Lam) 13/144 well.
The Astra rig has completed the Dzheitune (Lam) B/141 well which was drilled to a depth of 4,502 meters. The well tested at a combined rate of 1,895 bopd with the short string and long string contributing 761 bopd and 1,134 bopd respectively. Future wells in this platform are expected to have better performance, as they will target a more prolific area of the field. The Astra rig has since spudded the Dzheitune (Lam) B/145 well.
Cash and cash equivalents and term deposits
The cash and cash equivalents and term deposits at March 31, 2010 were approximately US $1,104 million (December 31, 2009: US $1,138 million), including US$140 million (December 31, 2009: US $126 million) set aside for abandonment and decommissioning activities.
Capital expenditure for 1Q 2010 was around US $67 million (1Q 2009: US $81 million). Of the total capital expenditure, approximately 31% was attributable to infrastructure with the balance spent on drilling. The infrastructure spend during the first three months of the year included upgrading the processing facility and installation of the Dzheitune (Lam) B platform and in-field pipelines. Infrastructure expenditure for 2010 is expected to be weighted towards the second half of the year, subject to approvals. The Group expects to spend around US$ 250 million this year on infrastructure with the award of two production platforms Dzheitune (Lam) C and Dzhygalybeg (Zhdanov) A and US$600-700 million on infrastructure projects in the planning period of 2010-12.
CURRENT OPERATIONS AND OUTLOOK
Rig 40 is due to complete the Dzheitune (Lam) 13/144 well in May 2010 and is then planned to sidetrack potentially up to 2 existing wells on the same platform before the year-end to enhance production. The Iran Khazar rig is scheduled to complete the sidetrack of well Dzheitune (Lam) A/129 and complete a further 2 wells by the year-end. The Astra jackup rig which is operating on a six month basis is expected to complete the current well on Dzheitune (Lam) B before demobilizing in May 2010. The platform-based NIS rig has been contracted for two years. Ongoing mobilization of the NIS rig to Dzheitune (Lam) 28 platform has been subject to delays but it is still expected to complete 4 wells by the year end.
Dragon Oil is working towards completing 11 new development wells and up to 3 sidetracks in 2010. The Group expects to be able to achieve an average production growth of 10% to 15% per annum over the three year period of 2010-12.
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