Dragon Updates Cheleken Operations

Dragon Oil has commissioned its new processing facility and announces that the Facility is fully operational, subject to final official approval from the Turkmenistan Government. Field trial commissioning has been undertaken and the construction phase has been completed. All crude oil production from the Cheleken fields is now being diverted through the facility. Dragon Oil expects to announce the formal opening ceremony of the Facility in due course in conjunction with the Turkmenistan Government.

Commissioning represents completion of Phase I of the new processing facility. During 2007, Dragon Oil is planning to tender for Phase II of development of the facility, which will enable the facility to process, store and pump double the current capacity of hydrocarbons. Phase II is still under planning at the current time and is not expected to be complete until at least 2010.

In recent months, Dragon Oil has also focused greatly on recruiting employees in key roles, with a view to achieving its stated goals of accelerating the field development, renewing aging infrastructure and diversifying its asset portfolio. Notably, Dragon Oil has recruited new employees to fill the key roles of Head of Engineering, Construction & Maintenance, Head of Contracts & Purchasing and Senior Exploration & Development Geologist.

Hussain M. Sultan, Chairman and CEO of Dragon commented:
'I am pleased to announce that the company's New Processing Facility has been commissioned. Construction of this facility is a significant achievement for Dragon Oil. Going forward, this enables us to control the flow of crude oil production from the Cheleken fields more effectively, and in particular to monitor more closely the quality and quantity of the crude oil being produced and exported.'

Dragon Oil has signed a five-year extension to the rig contract for the Iran Khazar jackup, with contract rates fixed for the first two years.

Hussain M. Sultan, Chairman and CEO of Dragon commented:
'I am very pleased that we have been successful in signing an extension to the contract for the Iran Khazar drilling rig. The Iran Khazar rig has been the foundation for our continuous drilling program over the last 2 years and securing its services for the coming years is another cornerstone to ensure our program accelerates further and to meet our stated goal of fully developing and producing the fields in the Cheleken Contract Area.

Following on from the recent announcement that drilling of wells 13/118 and 21/ 117 had been completed, I am pleased to announce the results from well 13/118 and the upper zones from well 21/117. The 13/118 results are encouraging, particularly since the well is shallow, and further production optimization from this well is expected. The full results from well 21/117 are not yet available. However, I am confident that technical difficulties encountered with the long string in the dual completion will be resolved shortly and the well will produce as per our expectations.'

For More Information on the Offshore Rig Fleet:
RigLogix can provide the information that you need about the offshore rig fleet, whether you need utilization and industry trends or detailed reports on future rig contracts. Subscribing to RigLogix will allow you to access dozens of prebuilt reports and build your own custom reports using hundreds of available data columns. For more information about a RigLogix subscription, visit www.riglogix.com.