Dragon Oil Secures Loan Extension

Dragon reports that the Board has re-negotiated and concluded the terms of a new US$40 million loan with the majority shareholder Emirates National Oil Company (ENOC) LLC. The purpose of the Loan is to enable Dragon to repay the previous years' US$40 million loan which was due and repayable on May 3, 2004.

The loan is for a term of one year, carries interest at LIBOR plus 325 basis points, and fees of US $3.5 million. The fees are made up of a facility fee of US $250,000, and an arrangement fee of two equal installments of US $ 1.625 million, the first payable after 6 months and the second on final maturity repayment or earlier repayment of the Loan.

In the event of earlier repayment of the Loan the arrangement fee shall be pro-rated.

Hussain M. Sultan Chairman of Dragon Oil commented:

'We are very pleased that ENOC, our majority shareholder, has agreed to provide us with a new one-year US$40 million loan. ENOC's continued support in Dragon is essential to us carrying out our plans for continuous drilling.'