Dragon Oil plcs principal production and exploration interests are located in the Cheleken Contract Area in the Caspian Sea, offshore Turkmenistan. The Cheleken Contract Area covers approximately 950 sq.kms and comprises two offshore oil and gas fields, Dzheitun (LAM) & Dzhygalybeg (Zhdanov), in water depths of 10 to 37 metres.

            Red = 25 day moving average.           Green = 200 day moving average.

Dragon Oil's latest well caps a busy year for the ambitious producer
2:03 pm by Ian LyallThe latest Dragon well caps a busy year.



Dragon Oil (LON:DGO) has restated its production guidance for the year after the successful completion and testing of its latest well in the Caspian Sea.

A/177 on the Dzheitune (Lam) Field flowed at an initial 1,796 barrels of oil a day having been completed as a single producer to a depth of just over 3,000 metres.

This is Dragon’s 15th well of the year and completes an intensive drilling programme that targeted 13-15 wells.

Abdul Jaleel Al Khalifa, the company’s chief executive, said: "We have been producing at well above 70,000 barrels of oil per day since mid-August and we firmly re-iterate our production growth guidance of 10% for 2012."

Production is expected to grow between 10-15% each year in the period between 2012 and 2015, which will take output to 100,000 barrels per day during 2015.

Dragon says it aims to maintain this peak production for five years from 2016 onwards.

Dragon Oil’s output ends 2012 on a high
8:28 am by Jamie AshcroftThis morning it said that average production for the whole year was 67,600 barrels of oil per day, and by December the rate peaked at 73,500 bopd.



Dragon Oil (LON:DGO) this morning revealed that its operations in the Caspian Sea ended 2012 on a high.

Over the course of the year the company had to overcome operational challenges, mainly constrained production due to sand control issues in the wells, but it was still able to mark a 10% increase in daily production.

This morning it said that average production for the whole year was 67,600 barrels of oil per day (versus 61,500 bopd in 2011), but by December the rate peaked at 73,500 bopd.

The improvement is a result of Dragon’s extensive drill programme, which continues this year. In 2012 it drilled fifteen wells.

The drilling also led to a significant uplift in reserves - with 180% reserves replacement in the year -as it ended the year with 677mln barrels of oil and condensate reserves.

Dragon’s capex bill wasUS$382mln for the year and it ended 2012 with US$1.7bn in cash.

"Every year brings new challenges. In 2012, it was the sand control issues that we had to handle on an immediate basis,” said chief executive Dr Abdul Jaleel Al Khalifa.

“However, having mobilised all the necessary resources, procured and installed the required sand screens, we were able to restore production to normal levels and achieve a credible 10% increase in the average gross production.

“We have learnt from this experience. It is a success story for us to have been able to deal with the problem and to grow production beyond that impact.

Dragon also expanded its asset portfolio in 2012 with the addition of exploration projects in Iraq and Afghanistan.

With the group’s continued expansion it expects to increase production again in 2013, by an estimated 10-15%, based on plans to drill a further 13-15 wells this year.

But over the course of the next three years it plans to drill up to 55 wells. As a result it aims to establish total production of around 100,000 bopd by 2015, and then maintain this level of output for at least five years.

UPDATE: Dragon Oil shares advance after encouraging production update
11:39 am by Jamie AshcroftThe improvement is a result of Dragon’s extensive drill programme, which continues this year.



---Adds broker comments and share price details---

Dragon Oil (LON:DGO) shares advanced over 2% this morning as it revealed that its operations in the Caspian Sea ended 2012 on a high.

Over the course of the year the company had to overcome operational challenges, mainly constrained production due to sand control issues in the wells, but it was still able to mark up a 10% increase in daily production.

This morning it said that average production for the whole year was 67,600 barrels of oil per day (versus 61,500 bopd in 2011), but by December the rate peaked at 73,500 bopd.

The improvement is a result of Dragon’s extensive drill programme, which continues this year. In 2012 it drilled 15 wells.

The drilling also led to a significant uplift in reserves - with 180% reserves replacement in the year - as it ended the year with 677mln barrels of oil and condensate reserves.

Dragon’s capex bill was US$382mln for the year and it ended 2012 with US$1.7bn in cash.

"Every year brings new challenges. In 2012, it was the sand control issues that we had to handle on an immediate basis,” said chief executive Dr Abdul Jaleel Al Khalifa.

“However, having mobilised all the necessary resources, procured and installed the required sand screens, we were able to restore production to normal levels and achieve a credible 10% increase in the average gross production.

“We have learnt from this experience. It is a success story for us to have been able to deal with the problem and to grow production beyond that impact.

Dragon also expanded its asset portfolio in 2012 with the addition of exploration projects in Iraq and Afghanistan.

With the group’s continued expansion it expects to increase production again in 2013, by an estimated 10-15%, based on plans to drill a further 13-15 wells this year.

But over the course of the next three years it plans to drill up to 55 wells. As a result it aims to establish total production of around 100,000 bopd by 2015, and then maintain this level of output for at least five years.

Caren Crowley, analyst at Dublin based broker Davy, described it is as a strong update.

“There are positive surprises in this morning's statement, including a better-than-estimated cash position and growth in reserves while the re-iteration of production guidance is pleasing as are year-end production rates.

“These positive surprises, coupled with the possibility of further share buybacks, should help the stock trade up this morning with a marketing agreement expected shortly.”

Meanwhile Oriel Securities’s analyst Arpit Harbhajanka is expecting Dragon Oil share price to improve with future updates as the company shows it is on-track to achieve production targets, thus narrowing the current discount to asset value.

£12 is my target by this time next year.
Billions $s cash in the account and generating millions every single day. There is virtually no risk to the business.

Invested in high reward, and probably high risk areas. These have not been looked at by the EXPERTs (ANALYSTS) yet!

i think one of the problems is that ENOC hold a very large slab (51%), thus restricting the market in the shares and blocking any potential t/o ...... ENOC will not much care how sp stands

Yes, they pushed it down and made an offer about two years ago. They have difficulty to do so anymore, so they have to either bid at much higher levels or leave it until the real value of the company is realized.

Why not an external bid? It has $1.7 bln cash, almost 40% of the market cap.

ENOC don't need to do anything at all and an external bid is doomed to fail

but should fly this morning as excellent result at cheleken reported by FT

Dragon output cheer as Cheleken succeeds
http://link.ft.com/r/P75VYY/K9R48Y/182O0C/SPYWPT/OFB7A7/T3/h?a1=2013&a2=1&a3=16

zero reaction, so guess it must have been old news

Marketing arrangements
RNS
RNS Number : 7993V
Dragon Oil PLC
17 January 2013



17 January 2013



DRAGON OIL PLC

(the "Company" or together with its subsidiaries "Dragon Oil" or the "Group")

Marketing arrangements

Dragon Oil plc (Ticker: DGO), an international oil and gas exploration, development and production company, today announces that the Group has reached a two-year agreement with Socar Trading for the sale of the full volume of our export entitlement production via Baku, Azerbaijan.

The Group has reached an agreement to secure a reliable export route for all its anticipated export entitlement production until 31 December 2014, FOB (free-on-board) the Aladja Jetty. It is expected that the realised crude oil prices under this contract will be in the range of a 14-17% discount to Brent.

Dr Abdul Jaleel Al Khalifa, Chief Executive Officer, commented:

"I am pleased to announce that we will continue to work with our partners who have provided us with a stable market for the Group's growing volume of the crude oil production. We have thoroughly analysed available routes to export our share and realised that additional options can be available in two-three years, which may enable us to achieve higher realised prices in the future."



- end -

Dragon Oil extends marketing agreement for crude production
2:13 pm by Giles GwinnettAverage production for the whole year was 67,600 barrels of oil per day (versus 61,500 barrels of oil per day in 2011), but by December the rate peaked at 73,500 barrels of oil per day (bopd)

Dragon Oil (LON:DGO) has extended an agreement for transport and sale of its crude until the end of next year.

The firm has secured the deal with Socar Trading for all its anticipated export entitlement production until December 31, 2014 via Azerbaijan, it said in a brief statement.

Dragon expects the realised crude prices under this contract to be at a 14-17% discount to Brent.

Chief executive Dr Abdul Jaleel Al Khalifa said: "I am pleased to announce that we will continue to work with our partners who have provided us with a stable market for the goup's growing volume of the crude oil production.

"We have thoroughly analysed available routes to export our share and realised that additional options can be available in two-three years, which may enable us to achieve higher realised prices in the future."

Two days ago, the company's shares advanced over 2% as it revealed that its operations in the Caspian Sea ended 2012 on a high.

Average production for the whole year was 67,600 barrels of oil per day (versus 61,500 barrels of oil per day in 2011), but by December the rate peaked at 73,500 barrels of oil per day (bopd).

The improvement is a result of Dragon’s extensive drill programme, which continues this year. In 2012 it drilled 15 wells.

The drilling also led to a significant uplift in reserves - with 180% reserves replacement in the year - as it ended the year with 677mln barrels of oil and condensate reserves.

Dragon Oil upgraded by Davy after cash and reserves increased
8:55 am by Jamie AshcroftTrading at 580p a share the company’s share price is priced at a significant discount - about 20% - to the broker's NAV estimate.



Dublin based broker Davy has upgraded its valuation of Dragon Oil (LON:DGO) following an upbeat operational statement earlier this week.

The offshore oil producer, with operations in the Caspian Sea, revealed that production ended 2012 on a high peaking at 73,500 barrels a day in December after it overcame the sand control challenges that has previously constrained output earlier in the year.

Dragon also revealed a significant uplift in reserves - with 180% reserves replacement in the year - as it ended the year with 677mln barrels of oil and condensate reserves. And the company said that it ended 2012 with US$1.7bn in cash.

Davy analyst Caren Crowley increased her net asset value (NAV) estimate for Dragon today to 736p a share from 712p – though she says this NAV is for Dragon’s cash and liquid resources only.


Trading at 580p a share the company’s share price is priced at a significant discount - about 20% - to the broker's NAV estimate.

“The current share price suggests that the market will not pay up for Dragon's $1.7bn in net cash although management commenced a dividend payment in 2011 and executed a value-accretive $200m share buyback programme in 2012,” Crowley said.

With its continued expansion Dragon expects to increase production again in 2013, by an estimated 10-15%, based on plans to drill a further 13-15 wells this year.

But over the course of the next three years it plans to drill up to 55 wells. As a result it aims to establish total production of around 100,000 bopd by 2015, and then maintain this level of output for at least five years.

The produced oil is currently exported via Azerbaijan, and yesterday it confirmed that it had secured access to this reliable export route for a further two years following an agreement with Socar Trading.

Chief executive Dr Abdul Jaleel Al Khalifa said the company has thoroughly analysed available export routes and it has realised that additional options can be available in two-three years, which may enable us to achieve higher realised prices.

Under the current marketing arrangement, via the Azerbaijan route, Dragon expects realised crude prices to be at a 14-17% discount to Brent.

Saturday, January 19, 2013
Weekly oil and gas news summary including Dragon Oil, Europa Oil & Gas, Lansdowne Oil & Gas and Faroe Petroleum






The week ended for offshore oil producer Dragon (LON:DGO) with an upgraded valuation from broker Davy.

It followed an upbeat operational statement earlier this week when it said production for 2012 had ended on a high peaking at 73,500 barrels a day in December after it overcame the sand control challenges that has previously constrained output earlier in the year.

Dragon also revealed a significant uplift in reserves - with 180% reserves replacement in the year - as it ended the year with 677mln barrels of oil and condensate reserves. The company said that it ended 2012 with US$1.7bn in cash.

Davy analyst Caren Crowley increased her net asset value (NAV) estimate for Dragon today to 736p a share from 712p – though she says this NAV is for Dragon’s cash and liquid resources only.

Trading at 580p a share the company’s share price is priced at a significant discount - about 20% - to the broker's NAV estimate.

Dragon Oil a safe harbour in turbulent times suggests broker
11:46 am by Philip WhiterowThere was also an impressive 180% reserves replacement, adds the broker.



Dragon Oil’s (LON:DGO) strong balance sheet, cashflow and favourable PSA agreement make it a safe harbour during periods of commodity market turbulence, suggests US broker Citigroup.

Recent news on production and reserves replacement has underlined the quality of the reserves base in Turkmenistan, it added.

Because of the new larger discount on a new marketing contract, the broker has trimmed its earnings forecasts by 8-6% in 2013-2015 and its target price by 7% to £8.18/share, but says this should not take away from upstream performance.

The group is back on track to hit its 2015E production target of 100,000 barrels daily (bpd), growth of 10-15% annually, with the 73,500 bpd output achieved in December only 4% off the broker’s 2013 target of 76,600 bpd.

On a full year basis, this implies 13% year on year growth versus 2012.

There was also an impressive 180% reserves replacement, adds the broker.

Earnings multiples suggest Dragon Oil looks cheap both compared to its peer group’s average as well as relative to its own historical metrics.

Also, net cash was US$1.7bn at end December while constituting free cash flows should amount to US$400-600mln annually through 20113-15E.

Citigroup’s new target price implies 47% total return to today’s price, while any weakness in the shares should be seen as a particularly strong buying opportunity, concludes the broker.

Dragon Oil signs contract in Iraq
Mon 28 Jan 2013

LONDON (SHARECAST) - International oil and gas exploration, development and production company Dragon Oil announced Monday that the Iraqi Ministry of Oil and the Tender Committee has signed the final service contract with a consortium of companies, including Dragon Oil, for the exploration, development and production for Block 9 in Iraq.

Following a joint bid with Kuwait Energy, the two firms will split the block (Dragon 30%) between then, with Kuwait as the operator over a five year period. If in this time frame the block is found to be commercial, the consortium will automatically become eligible for 20-year development and production phases, extendible by a further five years.

Dr Abdul Jaleel Al Khalifa, Chief Executive Officer, said: "I am pleased to announce the formal signing of the service contract for Block 9, which had previously been initialled on July 16th 2012.

"This step concludes the formal process following which the consortium now has the right and obligation to commence the exploration activities in the Block. We look forward to working with our partners in Iraq."

The share price fell 1.22% to 564.50p by 14:40.

That's great news for DGO. Iraq resources were left untouched for 30 years, since the start of war with Iran, then Kuwait, followed by sanctions etc..

2012 Full-Year ResultsKey Operational and Corporate Highlights



Drilling

§ Fifteen wells completed during 2012 against an initial guidance of 13 to 15 wells;

§ Average gross daily production increased by 10% to 67,600 bopd;

§ Average daily production rate for the month of December 2012 was 73,500 bopd;

§ Two platform-based rigs are scheduled to commence drilling in the Dzhygalybeg (Zhdanov) area; and

§ The contract to continue the use of the currently deployed jack-up rig extended for another two years.

Corporate and Commercial Developments

§ 180% organic reserves replacement of 2P oil and condensate reserves;

§ 2012 year-end oil and condensate 2P reserves increased by 44 mn barrels to 677 mn barrels with oil and condensate contingent resources at 59 mn barrels; gas 2P reserves and contingent gas resources remained at similar levels of c. 3 TCF;

§ Marketing route for the full export volumes secured for two years to 31 December 2014;

§ Dragon Oil in a consortium of companies was awarded exploration Block 9 in Iraq; and

§ Dragon Oil in a consortium of companies was selected as the winning bidder for two exploration blocks in Afghanistan.

Financial Developments

§ The Board recommends the payment of a final dividend of 15 US cents per share for 2012; the full-year dividend for 2012 amounts to 30 US cents (2011: 20 US cents);

§ $200mn share buyback programme was undertaken in 2012 with 22.6 mn shares purchased and cancelled; and

§ Cash generating abilities remained strong: US$1bn was generated from operations during 2012.

Outlook for 2013-15

§ Expect to complete 13 to 15 wells and two workovers in 2013 and around 20 development wells per year in 2014 and 2015;

§ Target annual production growth at the lower end of the medium-term guidance of 10-15% on average per annum in 2013 and around 15% in 2014 and 2015;

§ Achieve the 100,000 bopd production target in 2015;

§ Drilling from the Dzhygalybeg (Zhdanov) A and B platforms due to commence in 2H 2013;

§ Plans to award a contract to build the Dzheitune (Lam) D and E platforms in 2013;

§ The Caspian Driller jack-up rig expected for delivery in mid-2013;

§ Perform water injection pilot projects at the Dzheitune (Lam) 75 and 13 areas;

§ US$1.5 billion estimated capital expenditure for infrastructure and drilling in 2013-15 in the Cheleken Contract Area;

§ Progress plans to build the Gas Treatment Plant; and

§ Actively pursue the diversification strategy.





http://www.moneyam.com/action/news/showArticle?id=4536785

Dragon Oil ends year in rude health as focus returns to production targets
7:36 am by Ian LyallOutput rose by 10% in 2012 to 67,600 barrels a day and hit 73,500 barrels in December.

Dragon Oil (LON:DGO) ended 2012 in rude financial health. It had more than US2.1bn on the balance sheet, allowing it pay a 15 cents final dividend and maintain its US$200mln share buyback programme.

Revenues for the year were little changed at US$1.16bn, while profits were down 7% at US$600mln as the group incurred higher field operating costs and depletion charges.

However at this stage in its development, production from its fields in the Caspian Sea is the key performance indicator for Dragon.

Output rose by 10% in 2012 to 67,600 barrels a day and hit 73,500 barrels in December.

The performance was achieved against a backdrop of production problems encountered in the second quarter of 2012, which were quickly resolved.

“We mobilised our highly professional and experienced operational teams to tackle the challenge; the production quickly returned to the previous level,” said chief executive Abdul Jaleel Al Khalifa.

The plan is to be at 100,000 barrels in 2015. To that end it completed 15 new wells last year, at the very upper end of forecasts and plans complete 13 to 15 wells and two workovers in 2013. A further 20 wells per year are planned for 2014 and 2015.

Dragon’s principal producing assets are in the Cheleken Contract Area, in the eastern section of the Caspian Sea, off the coat of Turkmenistan. Its focus is on the re-development of two producing fields: Dzheitune (Lam) and Dzhygalybeg (Zhdanov).

220p cash ($2.1bln)
30c full year dividend
Target production 100 kbpd
Invested in Afghanestan and Iraq & expansion in Chechen area.
200 M$ buy back

Target in six month to a year?

Daily Oil & Gas Monitor

Dragon Oil (LON:DGO) – Cash IS King: Today’s full year results from Dragon Oil disclose the extent to which the Company’s investment plans have delivered growth, cash flow and more importantly added further strength to what was already an impressive balance sheet. We continue to believe that the operational performance will improve, but the question is what will it do with the resources that it has? The final line in the outlook for the period 2013 – 2015 is instructive in that it states that the Company will “Actively pursue the diversification strategy.” So, Bowleven could be back in the frame, but to be honest, so too could any Company, especially as equity valuations remain undemanding compared to underlying asset values. Given that the Company has cash, the potential for debt and raise further finance through equity, especially as 51% shareholder is ENOC, we believe that the Company could easily seek acquisitions up to $5bn, should it so desire.

In this news:

• Drilling

o Fifteen wells completed during 2012 against an initial guidance of 13 to 15 wells

o Average gross daily production increased by 10% to 67,600 bopd

o Average daily production rate for the month of December 2012 was 73,500 bopd

o Two platform-based rigs are scheduled to commence drilling in the Dzhygalybeg (Zhdanov) area; and

o The contract to continue the use of the currently deployed jack-up rig extended for another two years

• Corporate and Commercial Developments

o 180% organic reserves replacement of 2P oil and condensate reserves

o 2012 year-end oil and condensate 2P reserves increased by 44mm bbl to 677mm bbl with oil and condensate contingent resources at 59mm bbl; gas 2P reserves and contingent gas resources remained at similar levels of c. 3tcf

o Marketing route for the full export volumes secured for two years to 31 December 2014

o Dragon Oil in a consortium of companies was awarded exploration Block 9 in Iraq; and

o Dragon Oil in a consortium of companies was selected as the winning bidder for two exploration blocks in Afghanistan

• Financial Developments

o The Board recommends the payment of a final dividend of 15 US cents per share for 2012; the full-year dividend for 2012 amounts to 30 US cents (2011: 20 US cents)

o $200mn share buyback programme was undertaken in 2012 with 22.6mm shares purchased and cancelled; and

o Cash generating abilities remained strong: $1bn was generated from operations during 2012

• Outlook for 2013-15

o Expect to complete 13 to 15 wells and two workovers in 2013 and around 20 development wells per year in 2014 and 2015

o Target annual production growth at the lower end of the medium-term guidance of 10-15% on average per annum in 2013 and around 15% in 2014 and 2015

o Achieve the 100,000 bopd production target in 2015

o Drilling from the Dzhygalybeg (Zhdanov) A and B platforms due to commence in 2H 2013

o Plans to award a contract to build the Dzheitune (Lam) D and E platforms in 2013

o The Caspian Driller jack-up rig expected for delivery in mid-2013

o Perform water injection pilot projects at the Dzheitune (Lam) 75 and 13 areas

o $1.5 billion estimated capital expenditure for infrastructure and drilling in 2013-15 in the Cheleken Contract Area

o Progress plans to build the Gas Treatment Plant; and

o Actively pursue the diversification strategy.