Dragon Oil Outlines Current Drilling Progress at LAM Field

At the Aton Capital Conference, Mr. Hussain M. Sultan of Dragon Oil stated that the current drilling from the LAM 21 platform, in the LAM field of the Cheleken Block Offshore Turkmenistan, is the start of a 38 well field development plan, designed to exploit a substantial portion of its proven reserves. The continuous drilling, scheduled to take up to 2009, will be conducted from both refurbished and new platforms.

The new drilling and completion techniques, carried out by Dragon on the LAM 22 platform from late 2001 to early 2003, proved production rates, from such new wells, are higher than from wells drilled with old technology. Dragon's development plans indicate that implementation of the full field development plan could build oil production to a level of some 40,000 bopd by 2008/2009, assuming initial production rates for each new LAM well of 3,000 bopd. The well production decline rates, characteristic of the Cheleken fields, range from 55% initially, before stabilizing to approximately 25% per annum.

'There are prospects of accelerating the field development plan and the Board is looking at various strategies in this regard. The current field development plan does not assume gas development although from our studies we see there is a commercial value. The Company is evaluating various strategies for transporting, processing and marketing its gas resources in the near future.'