Dragon Oil Completes Third LAM Development Well

Dragon reports that drilling of well LAM 21/108 has been successfully completed. Well LAM 21/108 tested at a rate of up to 1,843 barrels of oil per day (bopd) from reservoir Zones 3 and 4. The well is producing oil from seven intervals (in the two Zones) at a depth of 2,470 to 2,917 meters. Wireline logs indicate further production potential in reservoir Zones 3, 4 and 5 which will be perforated at a future date, due to pressure differentials.

Well LAM 21/108 is the third development well to be drilled on the refurbished LAM 21 platform in the Cheleken Contract Area, offshore Turkmenistan. The well was spudded on 25 May 2004 as part of Dragon's continuous drilling program in the Cheleken block. It was drilled to a depth of 3,222 meters in 34 days using rotary steerable drilling technology. Well Lam 21/108 also encountered over 80 meters of gas/condensate reservoirs in Zone 4.

The jack-up rig has been skidded to well LAM 21/109 which is due to be spudded later today.

The well workover program has continued successfully with a further 654 bopd added from well LAM75/93, in addition to 1,333 bopd from the workover of well LAM 75/78 in June. Total incremental production since mid June from well LAM21/ 108 and the workover program is 3,830 bopd.

Hussain M. Sultan, Chairman of Dragon Oil commented:

'Well 21/108 is the third well to be drilled from the refurbished LAM21 platform. New drilling technology has enabled us to drill the well faster and at lower cost than before. Combined with the success of the workover programme, we have added significant incremental production of 3,830 bopd in June and July. The gas reservoirs are very encouraging and will be used to accelerate the LAM gas development project.'