Dragon Oil stays strong on 10-15% growth outlook

Turkmenistan explorer aims for 100,000 bbd by 2015

Dragon Oil CEO Abdul Jaleel Al-Khalifa: committed to 15-10-15% production growth.
Dragon Oil CEO Abdul Jaleel Al-Khalifa: committed to 15-10-15% production growth.

Dragon Oil, the Turkmen-focused exploration and production independent part owned by the Dubai government has reaffirmed its ambitious production growth plans, aiming to hit 100,000 bpd from the Cheleken Contract Area (CCA) by 2015.

The company is currently producing approximately 67,000 bpd of crude and over 140 mmscfd of gas, and expects to complete drilling on another three wells before the year is out, taking its 2011 exploration program to 13 wells in all.

The company is keeping enhanced oil recovery prospects under review and intends to pilot a water injection project in 2012 to maintain reservoir pressure at the Lam field. “If successful, there is a possibility to increase further the total recovery of oil from the field and to increase production beyond 100,000 bpd,” says the company.

Dragon Oil expects to pay down $1 billion in capital expenditure on its 2012 – 2015 oil field development program, by which it intends to be able to drill 15-20 wells per year. The program includes the settled acquisition of a Super M2 jackup rig – the “Caspian Driller” – which is on its way to the Caspian and now due by H1 2012, with another due to follow. The company is also tendering for a land rig and a third Super M2.

The Caspian Driller, constructed by CIMC-Raffles and to be managed by Momentum, was originally due for delivery before the end of 2011.

The updated field development plans as well as infrastructure and drilling projects are subject to the Turkmenistan Government approvals.

The company is also awaiting the conclusion of negotiations with the Turkmen government over the monetisation of associated gas being captured from the CCA, which could trigger further capital investment.

In a company statement, Dragon Oil's CEO Dr Abdul Jaleel Al-Khalifa said:

“Future drilling in the Dzhygalybeg (Zhdanov) field and from the Dzheitune (Lam) C and D platforms in the Dzheitune (Lam) West field will further affirm our production growth forecast. The plateau production of 100,000 bopd is a milestone that we aim to achieve in 2015 and maintain for a minimum period of five years. This will represent a significant organic production growth from the Cheleken Contract Area, while any success in the acquisitions arena will offer additional potential for non-organic growth."

The company recently diversified its exploration portfolio with a 55% Farm-in Agreement with C.E.Tunisia Bargou, for the highly prospective Bargou Permit offshore Tunisia, North Africa. The company is a also a contender in the fourth bidding round for exploratory fields in south Iraq due to take place in Match 2012.

The company’s shares are up 1% on early trading in London on the news.



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