Dragon's Chief: Cheleken 3D Work Advancing

Dragon Oil plc's Chairman and CEO, Hussain M. Sultan, reported that the company expects to have substantially completed its 3D seismic data relating to the Cheleken Contract Area in Turkmenistan by the end of the year.

"The completion of this project is very important to the long-term development of the Cheleken field and to the company as a whole," said Sultan. "We are making good progress."

In 2004, Dragon acquired a full-block 3D seismic program (652 kms2) across both the LAM and Zhdanov fields. This data was then processed and made available for interpretation in the fourth quarter of 2005. A preliminary interpretation of the time-migrated data set was initiated at this time and the resultant maps were used by the company's Reservoir Development team to position the LAM A platform and to identify the potential for hydrocarbons in the LAM West structure.

As Dragon announced recently, both of these areas have tested positively for hydrocarbons, by way of well A/119 and well 28/120 respectively. In spite of these successes, the company recognized there were significant imaging problems of the time migrated seismic data set due to the structural complexity of the fields. To overcome these problems, a full depth migration of the data was required and this was received in late 2006 with a significant improvement in the data quality.

Presently, the Reservoir Development team is working with external consultants to complete a full set of maps at three key reservoir levels by the end of June 2007. In the meantime, the 3D seismic data is being used on a daily basis to assist with the planning/placement of new well locations. These maps will be the first input into a major exercise of subsurface (static and dynamic) reservoir modelling which will commence in the second half of 2007. The results of the modelling efforts, coupled with the integration the data from the new wells to be drilled in 2007/08, will be used as the basis for an update of the hydrocarbon volumes, recoverable reserves and will incorporated in the FDP. This will be undertaken during 2008.

Dragon Oil plc is an independent oil and gas exploration and production company with interest in the Caspian Sea, Turkmenistan. A wholly owned subsidiary of the company, Dragon Oil (Turkmenistan) Ltd., holds 100% interest in and is the operator for a 25-year base term of the Production Sharing Agreement ("PSA") for the Cheleken Contract Area. Development of the two oil producing fields, LAM and Zhdanov in the Contract Area commenced in May 2000. Dragon has an exclusive right to negotiate an extension to the PSA for a further period of not less than 10 years.