TIDMDGO
RNS Number : 3024I
Dragon Oil PLC
24 July 2012
24 July 2012
Dragon Oil plc
(the "Company" or together with its subsidiaries "Dragon Oil" or
the "Group") Trading Statement
Dragon Oil plc (Ticker: DGO), an international oil and gas
exploration, production and development company, today issues the
following trading statement, which includes an operational update
and financial highlights for the six months' period ended 30 June
2012. All information referred to in this update is unaudited and
subject to further review. Dragon Oil expects to publish its 2012
Interim financial results on 14 August 2012.
Key operational highlights
-- 10.7% increase in average daily production rate at
approximately 64,200 barrels of oil per day ("bopd") in 1H 2012
compared to 58,000 bopd in 1H 2011;
-- 12 wells, including two sidetracks, completed from 1 January 2012 to-date.
Key corporate highlights
-- A consortium of companies, including Dragon Oil, has been
awarded an exploration, development and production contract for
Block 9 in Iraq's fourth bidding round;
-- US$200 million share buyback programme commenced in June 2012
to purchase up to a maximum of 5% of the issued share capital of
the Company, with approx. 11.5 million shares bought back.
Key financial highlights
-- Capital expenditure on infrastructure and drilling amounted
to US$208 million for 1H 2012 (1H 2011: US$151 million);
-- Group's cash balance (net of abandonment and decommissioning
funds) as at 30 June 2012 was US$1,667 million (31 December 2011:
US$1,527 million).
Dr Abdul Jaleel Al Khalifa, CEO, commented:
"The first half of the year was an eventful time for Dragon Oil
on a number of fronts. We have continued to deliver on our goal to
grow the Group into a multi-asset company as shown by the recent
award, in a consortium, of an exploration, development and
production contract for Block 9 in Iraq. To this end, we also
continue to build our expertise. We have hired an experienced
Exploration Manager to build a team to enhance our exploration
capabilities. Furthermore, we have strengthened the Board by adding
another Independent Non-executive Director with strong oilfield
services-related experience.
"In the second quarter, gross production was impacted due to the
choking down of certain wells to control sand production. We are
close to restoring field production to 70,000 bopd after resolving
the sand production issue. Given the pace of the drilling programme
so far this year, we have optimised the schedule to complete up to
16 wells, including two sidetracks, in total by the end of 2012. We
also anticipate production growth for 2012 to be in the range of
10-15%. We remain on target to reach the 100,000 bopd gross
production level in 2015.
"While diversification remains on top of our agenda, we also
commenced a US$200 million share buyback programme to return some
of the cash generated through solid growth of our asset in
Turkmenistan to our shareholders."
OPERATIONAL UPDATE
Production and Entitlement
The average gross field production for 1H 2012 reached 64,200
bopd (1H 2011: 58,000 bopd) at observed temperature. The increase
over the comparable period was 10.7%. As indicated earlier this
year, in 2Q 2012, a number of producing wells were choked down to
minimise production of sand; that had an impact on the oil flow
from these wells. We continue to bring the wells back to normal
levels of flow by installing sand screens in some of those affected
older wells as well as installing desander equipment on certain
platforms in areas prone to sand production.
The entitlement production for 1H 2012 was approximately 49% (1H
2011: 52%) of the gross production. Entitlement barrels are
finalised in arrears and are dependent on, amongst other factors,
operating and development expenditure in the period and the
realised crude oil price. Lower entitlement barrels in 1H 2012
arise from operation of fiscal terms of the Production Sharing
Agreement and are marginally lower due primarily to higher realised
crude oil prices offset by higher development expenditure.
Marketing
Dragon Oil sold 5.8 million barrels of crude oil in 1H 2012 (1H
2011: 4.9 million barrels). The 18% increase in the volume sold
over the previous year is due to higher production and change in
the lifting position.
In 1H 2012, Dragon Oil exported 100% (1H 2011: 100%) of its
crude oil production through Baku, Azerbaijan.
Drilling
Since the beginning of 2012, Dragon Oil has completed 12 wells,
including two sidetracks, in the Dzheitune (Lam) field. The
following table summarises the results of this drilling
programme:
13/140A January 2,237 Single sidetrack 2,123
-------- --------- --------- ---------------------- --------
A/165 January 3,060 Dual 2,272
-------- --------- --------- ---------------------- --------
28/166 February 2,810 Single 1,975
-------- --------- --------- ---------------------- --------
C/167 March 2,765 Dual 3,396
-------- --------- --------- ---------------------- --------
13/168 April 2,791 Single 1,008
-------- --------- --------- ---------------------- --------
28/169 May 2,010 Single 2,097
-------- --------- --------- ---------------------- --------
C/170A June 2,730 Dual 2,072
-------- --------- --------- ---------------------- --------
13/171 June Under further testing and optimisation
-------- --------- -------------------------------------------
28/172 June 2,007 Single 1,976
-------- --------- --------- ---------------------- --------
C/173 July 3,015 Dual 2,918
-------- --------- --------- ---------------------- --------
28/174 July 1,976 Single 1,705
-------- --------- --------- ---------------------- --------
13/144C July 2,637 Single sidetrack 956
-------- --------- --------- ---------------------- --------
We are currently adding intervals on the Dzheitune (Lam) 13/171
well and drilling the Dzheitune (Lam) C/175 development well. The
leased platform-based rig is currently undergoing scheduled
maintenance; we have secured an extension to the contract for use
of this rig to drill a further three wells.
The delivery of the new build Caspian Driller jack-up rig is
expected towards the end of 2012 and the rig is scheduled to be
ready for drilling in 1Q 2013.
The tendering process to secure two land rigs is ongoing with an
aim to deploy them onto the Dzhygalybeg (Zhdanov) A and B platforms
when these platforms are ready for drilling.
The tendering process to secure another jack-up rig is ongoing.
The construction phase is expected to take between two to three
years after the contract award. We anticipate being able to award
this contract in early 2013.
Infrastructure
The Dzhygalybeg (Zhdanov) A platform is expected for delivery by
the end of this year and we expect it to be ready for drilling in
1Q 2013. Work on the Dzhygalybeg (Zhdanov) B platform is
progressing as planned and the platform is expected to be delivered
and ready for drilling in 1H 2013.
Completion of the Dzhygalybeg (Zhdanov) Block-4 gathering
platform and installation of the associated in-field pipelines are
almost finalised.
The bids from contractors to build and install the Dzheitune
(Lam) D and E platforms and associated pipelines are under
evaluation and we expect contracts to be awarded by the end of
2012. These platforms will be suitable for drilling with a jack-up
rig with eight slots each initially and slots may be added in the
future depending on drilling results from these areas.
As stated earlier this year, we intend to start tendering
processes to award contracts for the construction and installation
of another three platforms in the Dzheitune (Lam) field, namely F,
G and H platforms and associated pipelines. Subject to the timing
of the tendering process, we envisage being able to award contracts
for the construction of these platforms in 2013.
FINANCIAL UPDATE
Capital expenditure
Capital expenditure for 1H 2012 was approximately US$208 million
(1H 2011: US$151 million). Of the total capital expenditure,
approximately 54% (1H 2011: 45%) was attributable to infrastructure
with the balance spent on drilling. The infrastructure spend during
the period included construction of the Dzhygalybeg (Zhdanov) A and
B platforms, Block 4 gathering station and structural upgrades of
the Dzheitune (Lam) A platform.
Realised prices
The average realised crude oil price during the first half of
2011 was approximately US$102/bbl (1H 2011: US$100/bbl), at a 10%
(1H 2010: 10%) discount to Brent. In 2012, the discount to Brent is
expected to range between 10% and 13%, depending on the level of
the oil price.
OTHER EVENTS
Diversification
A consortium of companies, comprising Kuwait Energy (40%), the
Turkish Petroleum Corporation (TPAO) (30%) and Dragon Oil (30%) has
been awarded an exploration, development and production contract
for Block 9 in Iraq's fourth bidding round. Block 9 is located in
the Basra province. The consortium's bid for Block 9 was awarded on
the basis of a remuneration fee of US$ 6.24 per barrel of oil
equivalent. The initialling of the contract took place in Baghdad,
Iraq on 16 July 2012.
Our partner in the Bargou Exploration Permit, offshore Tunisia
Cooper Energy has entered into a legally binding Letter of Intent
with Grup Servicii Petroliere SA (GSP) with respect to the rig
contract for the jack-up rig "GPS Jupiter" to drill the Hammamet
West-3 well, offshore Tunisia. Drilling is scheduled to commence
between December 2012 and March 2013 depending on when the rig is
released from previous commitments.
Further details on plans and progress on exploration assets in
Tunisia and Iraq will be provided in the 2012 Interim statement in
August.
Share Buyback Programme
On 6 June 2012, Dragon Oil commenced a US$200 million share
buyback programme to purchase up to a maximum of 5% of the issued
share capital of the Company. The Board of Directors of Dragon Oil
recommended the share buyback programme in recognition of the
Group's strong financial position and significant cash generating
abilities.
The share buyback programme will run until the requisite number
of shares has been acquired or, in any event, no later than 31
December 2012. As of 20 July 2012, 11,518,278 shares have been
purchased for cancellation at a weighted average price of GBP 5.56
per share.
OUTLOOK
For 2012, the updated target is to put into production up to 16
development wells, including two sidetracks of existing wells. This
represents an upgrade from the 13 wells target stated at the
beginning of the year. Twelve wells have been competed to-date with
up to four more wells to be put into production by the end of the
year.
The extra three wells will be drilled and completed by the
jack-up rig (one extra well) and by the leased platform-based rig
(two more wells).
Taking into account the current steps to improve production from
the field following the choking of certain wells to control sand
production, forecasts have been revised for the remainder of the
year. As a result, we expect the gross production growth rate for
the full year in 2012 to range between 10% and 15%.
We maintain our medium-term guidance over the 2012-15 period of
average gross production growth of 10% to 15% per annum, taking our
gross field production to the target level of 100,000 bopd in 2015
and maintaining this plateau for a minimum period of five
years.
An overview of infrastructure projects and drilling rigs,
exploration assets, as well as gas monetisation will be provided in
the 2012 Interim financial results statement. The Group expects to
report its 2012 Interim financial results on 14 August 2012.
- end -
For further information please contact:
Investor and analyst enquiries
Dragon Oil plc (+44 (0)20 7647 7804)
Anna Gavrilova
Media enquiries
Citigate Dewe Rogerson (+44 (0)20 7638 9571)
Martin Jackson
Kate Lehane
About Dragon Oil
Dragon Oil plc is an international oil and gas exploration,
development and production company, quoted on the London and Irish
Stock exchanges (Ticker symbol: DGO). Its principal producing asset
is in the Cheleken Contract Area, in the eastern section of the
Caspian Sea, offshore Turkmenistan.
Dragon Oil (Turkmenistan) Ltd., a wholly owned subsidiary of
Dragon Oil plc, holds 100% interest in and is the operator of the
Production Sharing Agreement for the Cheleken Contract Area. The
operational focus is on the re-development of two oil-producing
fields, Dzheitune (Lam) and Dzhygalybeg (Zhdanov).
www.dragonoil.com
Disclaimer
This news release may contain forward-looking statements
concerning the financial condition and results of operations of
Dragon Oil. Forward-looking statements are statements of future
expectations that are based on management's current expectations
and assumptions and involve known and unknown risks and
uncertainties that could cause actual results, performance or
events to differ materially from those expressed or implied in
these statements. No assurances can be given as to future results,
levels of activity and achievements and actual results, levels of
activity and achievements may differ materially from those
expressed or implied by any forward-looking statements contained in
this report. Dragon Oil does not undertake any obligation to update
publicly or revise any forward-looking statement as a result of new
information, future events or other information.
This information is provided by RNS
The company news service from the London Stock Exchange
END
TSTUOVVRUOABUAR
Dragon Oil (LSE:DGO)
Historical Stock Chart
From Jan 2025 to Feb 2025
Dragon Oil (LSE:DGO)
Historical Stock Chart
From Feb 2024 to Feb 2025
