www.dragonoil.com
Dragon Oil is an independent international oil and gas exploration, development and production company. Our principal asset is the Cheleken Contract Area, in the eastern section of the Caspian Sea, offshore Turkmenistan. The Group’s headquarters are located in Dubai, United Arab Emirates. Dragon Oil had proved and probable oil reserves as at 31 December 2009 of 617 million barrels and 3.1 trillion cubic feet of gas resources.
Dragon Oil makes successful start to 2012 with two well completions - UPDATE
Drilling results from two wells in the Caspian Sea made for a successful start to 2012 for Dragon Oil (LON:DGO).
The Dzheitune (Lam) 13/140A side-track produced at an initial rate of 2,123 barrels a day, while Dzheitune (Lam) A/165 well was completed as a dual producer and tested at a combined rate of 2,272 barrels.
The Iran Khazar rig has been mobilised to the Dzheitune (Lam) C platform and has spudded the Dzheitune (Lam) C/167 development well, Dragon said.
It also revealed it exited 2011 with a production rate of 71,751 barrels of oil per day.
Dublin based broker Davy believes that Dragon’s target of completing between 15 to 20 new wells each year looks increasingly comfortable. The broker says this is increasingly important because as a development story, more wells equate to a more certain production profile.
“With two wells already under its belt, Dragon has made a very healthy start to the year's drilling campaign,” analyst Job Langbroek said in a note to clients.
“With the expected arrival of the Super M2 jack-up rig in the first half of this year, the group's 15-20 wells per year target looks increasingly comfortable.”
Dragon Oil is the broker’s top pick in the sector at the moment. Langbroek highlights that Dragon Oil has a very strong valuation – when considering its enterprise value per barrel – compared to other producers.
He says that Dragon Oil shares trade at a 25 per cent discount to his net asset value for the company – which is 632p a share. He believes this discount is unwarranted, particularly as his NAV value is based on an US$85 a barrel valuation.
In addition to the drilling progress Langbroek points out that production overall was exceeding the firm’s targets.
“The (2011) exit production rate has comfortably beaten the group's target of 70,000 barrels of oil per day.
“Moreover, as the results of both wells are not included in the year-end number, the group has started the year at a good pace to grow the production profile. It has targeted a production rate of 100,000 bopd by 2015, based on an annual growth rate guided at 10 to 15%.”
Dragon Oil shares gained 6.75p, or 1.5 per cent, on the London Stock Exchange today.
This morning chief executive Dr Abdul Jaleel Al Khalifa said: "I am extremely pleased to announce a successful start to the 2012 Cheleken drilling programme.
“We have already completed and tested one development well and one sidetrack well, and drilling from the Dzheitune (Lam) C platform has commenced on schedule.
“We exited 2011 at the production rate of 71,751 bopd, ahead of our 70,000 bopd target, which was reached in mid-December.
“The good news reported today puts us in a strong position to continue to deliver solid results from the Cheleken Contract Area as we progress through the year."
