Tuesday 8 April 2014

Dragon Oil drilling update

Dragon Oil published an update on the drilling activity in the Cheleken Contract Area and its exploration assets in the first quarter of 2014.

In the Cheleken Contract Area, the Dzheitune (Lam) B/155A sidetrack was completed by the jack-up rig Elima as a single producer to a depth of 2,447 metres and tested in February 2014 at an initial production rate of 1,027 barrels of oil per day. Currently, the well is producing 1,175 barrels of oil per day. The jack-up rig has been mobilised to the Dzheitune (Lam) 4 platform and is drilling the Dzheitune (Lam) 4/187B well to appraise a location for a future platform: the current depth is 2,550 metres with a high angle inclination.

In March 2014, the Neptune rig spudded the Dzhygalybeg (Zhdanov) 21/101 development well. Land Rig 1 is currently drilling the Dzheitune (Lam) 22/188 well. Work is ongoing on the Dzhygalybeg (Zhdanov) A platform to accept Land Rig 2, which is expected to spud the Dzhygalybeg (Zhdanov) A/102 well in 2Q 2014.

There are three drilling rigs currently operating in the Cheleken Contract Area. We anticipate Land Rig 2, currently being mobilised offshore, to commence drilling later this quarter and the arrival of the Caspian Driller in 2H 2014.

The average field production in the Cheleken Contract Area for 1Q 2014 was 72,300 bopd (1Q 2013: 71,800 bopd). The average production for March 2014 was 73,400 (March 2013: 74,000 bopd) with the quarter's exit rate just above 73,000 bopd. The final production figures for the quarter will be published in the Interim Management Statement due to be released on 22 April 2014.

Due to the delayed start or anticipated later start of drilling by the rigs on site or arriving to the Cheleken Contract Area later this year, we now anticipate that the production growth in 2014 will be around 10% on the basis of 14-16 wells being completed during the year. The drilling programme is now expected to be weighed more towards the second half of the year.

In Iraq, the consortium of Dragon Oil (30%) and Kuwait Energy Corporation (70% and operator) spudded an exploration well using a drilling rig from the Iraqi Drilling Company on the 25th March 2014. The well is targeting two prospective reservoirs; testing is expected to take place in 2H 2014.