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.

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.

Dragon Oil: Nomura revises target price from 781p to 800p and stays with its buy recommendation.

sp has been ticking gently northwards for a little while (see chart at the top), and is now right on the all-time high ...... pullback or straight through? ..... likelihood is the former, but i'm happy enough just to sit tight even if it does

Straight through I hope - As of Mar 22, 2013, the consensus forecast amongst 14 polled investment analysts covering Dragon Oil plc advises that the company will outperform the market. This has been the consensus forecast since the sentiment of investment analysts deteriorated on Jul 24, 2012. The previous consensus forecast advised investors to purchase equity in Dragon Oil plc.

Annual Report and Accounts 2012

http://www.rns-pdf.londonstockexchange.com/rns/9322A_-2013-3-26.pdf

Ex dividend 3 April 12.8p payment 3 May

Dragon Oil unveils increase in output
Tue 02 Apr 2013


Dragon Oil unveils increase in output LONDON (SHARECAST) - Dragon Oil on Tuesday announced an increase in production in the first quarter as it completed wells at the Dzheitune (Lam) prospect, offshore Turkmenistan.

Production for three months to March 31st 2013, averaged 71,800 barrels of oil per day (bopd), up from 70,600 for the same period a year earlier.

Average production for March was 74,000 bopd compared to 72,000 bopd the previous year.

During the period, the company completed the Dzheitune (Lam) 28/178 and 28/179 wells which tested for initial production rates of 1,653 bopd and 1,975 bopd respectively.

The first well is currently stabilised and producing at a rate of 2,065 bopd while the latter is producing at a rate of 2,218 bopd.

Shares rose 1.54% to 660p at 12:00 Tuesday.

They are just printing cash.

£8 my 6m target

Interim Management Statement

Key highlights

· The average gross production rate in 1Q 2013 was approximately 71,800 barrels of oil per day ("bopd");

· March average gross production was approximately 74,000 bopd with the month's exit rate at about 76,400 bopd;

· Two new development wells were put into production during the first quarter of 2013;

· Installation of the Dzhygaybeg (Zhdanov) A platform is in progress;

· Tendering process for the construction of the Gas Treatment Plant has commenced;

· Capital expenditure on infrastructure and drilling was approximately US$57 million in 1Q 2013;

· The Group reached an agreement to secure a reliable marketing route for all its anticipated export entitlement production from the Cheleken Contract Area until 31 December 2014; and

· The drilling of the Hammamet West-3 exploration well commenced in early April 2013 offshore Tunisia in the Bargou Exploration Permit.




http://www.moneyam.com/action/news/showArticle?id=4579515

Dragon Oil cranking it up
By John Harrington April 23 2013, 8:06am 'The delivery of the Caspian Driller is anticipated in mid-2013 and we plan to complete up to two wells using this rig in the second half of the year,' the company revealed."The delivery of the Caspian Driller is anticipated in mid-2013 and we plan to complete up to two wells using this rig in the second half of the year," the company revealed.

Production is steadily ramping up at Dragon Oil (LON:DGO), the international oil and gas exploration, development and production company revealed in a first quarter trading statement.

The average gross production rate in the first quarter of 2013 was around 71,800 barrels of oil per day (bopd), up from 70,600 bopd in the corresponding quarter of 2012.

Two new development wells were put into production during the quarter, resulting in average gross production cranking up to 74,000 bopd in March. By the end of the quarter, daily production was up to around 76,400 barrels.

With Brent crude averaging about US$112.60 per barrel during the first quarter of 2013, the average provisional realised crude oil price during the quarter was around US$92 a barrel (bbl), down from US$107/bbl the year before.

The group said capital expenditure on infrastructure and drilling in the first three months of the year totalled around US$457mln. The infrastructure spend in 2013 is expected to amount to around US$200mln, with about US$300mln to be spent on drilling.

At the end of the quarter, cash and cash equivalents and term deposits stood at US$1,579mln, versus US$1,737mln at the end of 2012.

Other highlights of the year so far include an agreement to secure a reliable marketing route for all its anticipated export entitlement production from the Cheleken contract area until 31 December 2014, and the commencement in early April 2013 of drilling of the Hammamet West-3 exploration well, offshore Tunisia in the Bargou exploration permit.

Dr Abdul Jaleel Al Khalifa, Dragon Oil’s chief executive officer, revealed that initial results from the drilling in the Bargou permit are expected towards the end of the second quarter of 2013, with more detailed analysis to follow.

“Drilling activity is expected to pick up in the second half of the year with the arrival of the two platform rigs secured for drilling in the Dzhygalybeg (Zhdanov) field and the Caspian Driller jack-up rig.

“In Iraqi Block 9, the joint management committee and the partners agreed to conduct the necessary work to enable the drilling of an early well - this reflects the confidence in the existing geological data for the block," he added.

For 2013, the board has indicated that growth in production will be towards the lower end of its medium-term guidance range of 10-15% on average per year.

The board of Dragon Oil has recommended a final dividend for 2012 of 15 cents, unchanged from the interim dividend.

Shares in Dragon Oil rose 1% to 610.5p in early trading.

Sold my holding - in at 520 out at 634.

bought many years ago, No intention to sell below £10.