Dragon Signs Contract for Refurbishment, Operation of Platform Rig

Dragon Oil Plc has signed a two-year contract with Continental Industrial Supply Limited ('CIS') for the refurbishment and operation of Dragon Oil's platform-based drilling rig ('Rig 40'). Rig 40 is expected to be deployed in the fourth quarter of 2007 to commence drilling of a development well from the LAM 13 platform.

Hussain M. Sultan, Chairman and CEO of Dragon Oil commented:

"I am pleased that we have concluded this agreement to refurbish and deploy our own Rig 40. This will give us the required rig security and enhances our ability to meet our field development aspirations. With the signing of this agreement, CIS, which has significant experience in rig operations in Turkmenistan, will manage both of the platform-based rigs deployed in the Cheleken Contract Area."

Dragon Oil has signed a contract with CIS for the refurbishment and operation of its own platform-based Rig 40. The refurbishment and mobilization process will take approximately 6 months to complete and then CIS will operate Rig 40 in drilling operations for an initial contract duration of two years. Once refurbished, Rig 40 will be made ready for offshore operations and it is expected to commence drilling operations towards the end of 2007. It is planned that Rig 40 will drill a series of development wells in the LAM field from the LAM 13 platform.

Engineering and construction works has been underway for some time on the LAM 13 platform, to make it ready for the planned mobilization of Rig 40. These works include an upgrade to the LAM 13 platform and the installation of additional drilling slots.

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