Dragon Oil operating profit soars 135% in H1 2011

High oil price & 25% production hike sees h1 profit of $309.4 million

Average production over H1 2011 was 58,000 barrels per day, an increase of 25%.
Average production over H1 2011 was 58,000 barrels per day, an increase of 25%.

Turkmenistan-focused exploration and production independent Dragon Oil has today reported a profit increase of 135% over H1 2011 as a result of high oil prices and increased production.

First half operating profit jumped to $407.3 million and net profit rose to $309.4 million in the six months to 30 June the London-listed, Dubai-headquartered company said on Wednesday, from $173.6 million in the same period the year before, boosted by an oil price which was 39% higher.

Production has jumped 25% to 58,000 barrels per day, ahead of the company's stated annual target of 20% growth. The company is sticking to it's medium-term target for production growth of 10-15% to 2013.

Dragon Oil CEO Dr Abdul Jaleel Al Khalifa, commenting on the results in a company statement, said"we continue to successfully ramp up production from the Cheleken Contract Area, which in the first six months of this year increased by 25% over the corresponding period in 2010. With five more wells to be completed by the end of the year plus a sidetrack and the workover of an existing well, we are set to achieve strong production growth over last year.

The first six months of 2011 were also a record in terms of revenues generated: the best ever result over comparable periods due to the continued strong production growth and high realized oil prices.

On the gas monetisation front, we are looking at a dual strategy, which would involve a short-term agreement, reflecting the current weak global gas demand, and then a long-term agreement more in line with gas export marketing.

We remain prudent in our M&A strategy and only target those opportunities that offer value-adding diversification and growth potential."

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