Dragon Oil Says LAM Field Achieves Production Target

Dragon Oil reports the completion of testing of well LAM 22-105, the fifth and last of a series of development wells to be drilled on the LAM 22 platform in the Cheleken block, Turkmenistan. Well LAM 22-105 tested at a cumulative rate of 9,464 barrels of oil per day ('bopd') from three intervals. The well will shortly commence production from one interval at a depth of 2,464 to 2,635 meters.

The completion of this last well on LAM 22 has seen Dragon exceed its stated production target of 15,000 bopd by the end of 2002, having brought into production four new wells (including LAM 22-105) during that year.

The continuation of Dragon's successful drilling program is dependent on further funding, which has yet to be secured. In the absence of that funding, Dragon has commenced the demobilization of Rig 40, in accordance with the work plan.

Dragon is continuing to seek further funding and is examining the opportunities available to it. Dragon's case is supported by its success in achieving its 2002 production target.

The US $50 million loan provided in May 2002 by Emirates National Oil Company Limited (ENOC) L.L.C. is subject to full repayment on the due date in May 2003. There has as yet been no confirmation from ENOC that the repayment terms can be re-negotiated.

Hussain M. Sultan, Chairman of Dragon Oil commented: 'LAM 22-105 is the fifth well put into production on LAM 22 and we are extremely satisfied to have exceeded our production target of 15,000 barrels per day by the end of 2002. Other than achieving its production target, Dragon has made significant achievements during 2002 including much reduced drilling and operating costs. However, the securing of further funding, which remains a priority, has yet to be achieved. If we are to produce the available oil, Dragon needs to invest further in upgrading facilities, both onshore and offshore. It is unfortunate that having come so far and achieved so much, that we are unable to capitalize on our success due to lack of funding. Therefore, the continuous drilling program will need to be deferred until the latter part of 2003 in accordance with the work program.'