Dragon Oil Updates Activities at Lam Well

Dragon Oil plc published an update on the successful completion and initial testing of the Dzheitune (Lam) 28/169 development well and on the Group's recent production performance.

The Dzheitune (Lam) 28/169 well was completed as a single producer to a depth of 6,594 feet (2,010 meters). It tested for initial production at 1,775 barrels of oil per day ("bopd"). The drilling rig has skidded to the next slot and spudded the Dzheitune (Lam) 28/172 well.

Early in 2Q 2012, a number of older wells were choked down to minimize possible production of sand; that had an impact on the oil flow from these wells. We are gradually bringing the wells back to normal levels of flow by installing sand screens in some of those affected older wells as well as desanders on certain platforms in areas prone to sand production.

Over the last two years, we have been installing sand screens on newer wells to control sand production and to ensure effective oil flow from well completions and we will continue to do so in 2012. In 2011, we also installed a desander on the Dzheitune (Lam) 63 platform.

Taking into account the performance in 1Q 2012 and estimates for 2Q 2012, we forecast that the average gross production growth in 1H 2012 is likely to be around 10-15 percent over the average gross production level of 58,000 bopd achieved in 1H 2011. We expect to return to the above 70,000 bopd level in July. We are seeking to optimize the drilling program for the remainder of the year including a possibility of drilling some additional wells. We maintain our guidance for the gross production growth rate for the full year in 2012 at 15 percent.


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