Dragon Oil 25% production hike beats expectations

Shares on London Stock Exchange up 20p on production, sales increases

The company is sitting on over $1.2 billion in cash, which it is ready to invest in new markets.
The company is sitting on over $1.2 billion in cash, which it is ready to invest in new markets.

Turkmenistan-focused oil and gas company Dragon Oil has bested analysts' expectations by reporting a 25% increase in oil production from the Cheleken Contact Area in Turkmenistan.

In a company statement, Dragon Oil said said first-half production was up by a quarter to 58,000 barrels per day, aided by a string of new successul wells coming onstream.

The Dubai-based company reiterated its forecast of production growth of up to 20 percent this year and 10-15 percent per annum for 2011-13.

In addition to healthy E&P figures, Dragon Oil sold 4.9 million barrels of crude oil in the first six months of this year, up 32% on the same period in 2010, at an average price of c.$100 per barrel.

The company said on Thursday capital expenditure in the first six months was $151 million, leaving it with a cash pile of $1.256 billion.

COmmenting on the statement, Dr Abdul Jaleel Al Khalifa, Dragon Oil CEO, said “we have achieved a significant production growth of 25% over the first half of last year, which puts us in a comfortable position to reiterate our guidance for gross production growth in 2011 of up to 20%. With three rigs currently operating full-time for Dragon Oil in the Cheleken Contract Area, we expect to drill and complete 12 wells, a sidetrack and a workover within the 2011 drilling programme".

“On the infrastructure front, we have seen encouraging progress in a number of projects and some delays in other projects. We have also recently awarded a contract for the construction of Block 4, a riser platform, together with the associated pipelines to cater for new wellhead and production platforms to be installed in the Dzhygalybeg (Zhdanov) field".

“With significant budget allocated for infrastructure development in 2011-13, we will be tendering out contracts for the construction of at least three new platforms with associated pipelines in the next 18 months alongside a number of other projects".

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