UAE: Dragon Oil plc Trading Statement and Reserves Update

Dragon Oil plc , an international oil and gas exploration and production company,  issues the following trading statement, which includes an operational update and financial highlights for 2010, and the results of the latest reserves assessment.

All information referred to in this update is unaudited and subject to further review. Dragon Oil expects to publish its 2010 preliminary financial results on 22 February 2011.

Key highlights

Operational highlights:

– Planned drilling programme of 11 wells accomplished with the completion of the last well shortly after the year-end;

– Major pipeline and processing infrastructure completed and commissioned before the year-end removing bottlenecks that had constrained production growth in 2010; as a result:

· Average production in December 2010 rose to 52,575 barrels of oil per day (“bopd”) (December 2009: 47,463 bopd);

· Production exit rate for 2010 reached 57,013 bopd (2009: 49,698);

· 2010 average daily production rate increased 5.5% to 47,211 bopd (2009: 44,765 bopd);

– Year-end reserves upgraded to 639 (December 2009: 617) million barrels of oil and condensate and 1.6 TCF of gas reserves corresponding to 260 million barrels of oil equivalent (“boe”); the gas resources are reduced to 1.4 (December 2009: 3.1) TCF.

Financial highlights:

– Capital expenditure on infrastructure and drilling amounted to US$454 million for 2010 (2009: US$317 million);

– The Group’s cash and cash equivalents and term deposits as at 31 December 2010 was US$1,337 million (31 December 2009: US$1,138 million), including US$174 million in abandonment and decommissioning funds (31 December 2009: US$126 million).

Dr Abdul Jaleel Al Khalifa, CEO, commented:

“2010 was a very active year for Dragon Oil with major pipeline and processing facilities completed, 11 wells put into production and contracts for a Super M2 jack-up rig and two new platforms awarded – just to mention a few of the projects completed and awarded during the year. Over the past year, we have undertaken a number of concrete steps to secure production growth in the years ahead and we will continue to invest in infrastructure and secure drilling rigs on favourable commercial terms.

Dragon Oil has delivered solid results despite last year’s production growth falling short of our expectations due to infrastructure bottlenecks. This situation has now been resolved with the introduction of the new facilities, resulting in the year-end exit rate of 57,013 bopd, which is almost 10,000 bopd higher than the average daily production rate for 2010.”

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Source: Dragon Oil, January  20, 2011;