Dragon Oil H1 profits and revenues climb as production rises 8%

Oil and gas

producer and FTSE 250 constituent Dragon Oil (LON:DGO) reported a 4.9% increase in H1 revenues driven by higher oil prices and said its 2010 drilling programme was on track, as were its goals to up production by 10-15% in each of the next three years.

Revenues in the six months to 30 June climbed 4.9% to US$276.3 million, largely due to a 50% increase in crude oil prices, while profit for the period jumped 31% to US$137.6 million and operating profit soared 42.3% to US$173.6 million. Capex (capital expenditure) increased by 11.9% to US$173.6 million.
Dragon Oil said it was on track to complete a total of 11 wells during 2010 with target production growth of up to 10%, looking to achieve growth of 10-15% in 2010-2012 after gross field production rose 8% year on year during H1. Phase 2 expansion of the central processing facility is on track for completion in H2 2010.

The average daily production rate on a working interest basis was 46,420 bopd (barrels of oil per day) for 1H 2010 compared to 42,808 bopd in H1 2009.

The group has sold 3.7 million barrels of crude oil during the half after selling 4.9 million barrels a year ago. The average selling price increased from UYS$50/barrel to US$75/barrel.

A total of 4 rigs have been employed during the year with two of these continuing to operate on a full time basis. Dragon Oil is set to complete further five new development wells in 2010 to bring the total to 11 new wells for the year, which should help it achieve the 10% production growth target. At the start of the year, Dragon Oil awarded a contract a contract for the lease and management of a new build Super M2 jack-up rig, which is planned to be deployed in Q4 2011.

The company has also reported that discussions with the government of Turkmenistan about commercialisation of gas resources continued.

“In the first half of 2010 we have continued to focus on driving production growth forward and investing in infrastructure to ensure we have the capacity to support this objective in the years ahead…additionally we have put in place new marketing arrangements which provide us with a secure and reliable export route for our production for the year ahead. We remain confident in our outlook for the rest of the year,” said chief executive of Dragon Oil Dr Abdul Jaleel al Khalifa.

Dragon Oil said it was still looking at potential acquisitions in its core focus areas of the Caspian Sea region, Middle East and Africa, targeting late stage exploration and development projects.

Late last month, the company said that it awarded contracts for the construction of two new platforms, Dzheitune (Lam) C and Dzhygalybeg (Zhdanov) A, which will be completed in Q4 2011 and Q1 2012 respectively, also announcing the completion and initial testing of three wells, the Dzheitune (Lam) 13/144 & 28/146 development wells and the Dzheitune (Lam) A/129 sidetrack. Collectively, the three wells initially tested at over 5,000bopd (barrels of oil per day).

http://www.proactiveinvestors.co.uk/companies/news/19818/dragon-oil-h1-profits-and-revenues-climb-as-production-rises-8-19818.html