Dragon Oil Reports 2006 Interim Results

Dragon Oil

Dragon announced its interim results for the period ended June 30, 2006. Dragon's principal producing assets are in the Cheleken Contract Area, in the eastern section of the Caspian Sea, offshore Turkmenistan.


--23% increase in operating profit to US$95.3 million (1H 2005: US$77.6 million) primarily due to strong oil prices.

--Average gross production of 18,576 bopd during the first six months was 5% lower than the comparative period in 2005 (1H 2005: 19,533 bopd). Of that gross production, 13,444 bopd (1H 2005: 14,044 bopd) was attributable to Dragon. Lower production is primarily due to a blockage in a LAM field feeder pipeline, which was restored in April 2006.

--Net cash generated from operating activities of US$99.3 million was 19% higher than 1H 2005.

--Two successful development wells were completed from the LAM 10 platform using the 'Iran Khazar' rig and four wells were successfully worked over from two other platforms.

Mr Hussain M. Sultan, Chairman, commented:
'Dragon has had an operationally challenging first half of 2006, with notable drilling successes offset by an early and temporary blockage in a feeder pipeline. Despite this difficulty, the strong oil price led to a 23% increase in operating profit in the first half of the year.

Our drilling program has continued with the completion of two development wells in the first half of the year. The first of three additional development wells planned for the second half of 2006, well 10/115, has recently been successfully completed. The 'Iran Khazar' jack-up rig, which drilled and completed well 10/115, has moved on to drill a further development well at platform LAM 21. Upon completion of this well, the Iran Khazar will move to spud the first in a series of wells at the LAM 'A' platform. With the imminent deployment of the 'Astra' jack-up rig, Dragon will have two jack-up rigs operating concurrently for the first time.

Dragon will also deploy two platform-based rigs in the Cheleken Contract Area in 2007. Dragon's own 'Rig 40' will be refurbished and a letter of award has been signed for the second platform-based rig. Deployment of multiple rigs will go a long way to achieving our stated goal of accelerating the field development plan and consequently, driving up production.

Going forward through the end of 2006 and into 2007, Dragon will continue to focus on development of its core asset through an ambitious drilling program. The 3D marine seismic survey completed in 2005 confirmed the existence of promising prospects in the LAM West structure, which we are keen to exploit. Dragon is also actively reviewing its options for expansion of its portfolio by investment in additional acreage elsewhere.

I am very excited by the acceleration of the field development plan in the coming months and I look forward to the future with confidence.'