Dragon Oil PLC (LSE: DGO) said it has awarded a contract to Yantai Raffles Offshore Ltd of Singapore for lease and management of a new build Super M2 jack-up rig in the Cheleken contract area in the Caspian Sea offshore Turkmenistan.
The M2 jack-up rig is expected to be constructed and mobilized to the Cheleken contract area in Q4 2011. Upon delivery, the lease and management contract is expected to commence for an initial duration of five years, with an option to extend it for a further period of up to two years.
Chief executive Dr Abdul Jaleel Al Khalifa commented: “This contract gives us an excellent opportunity to secure the rig we want and for a longer period than would otherwise be possible in the open market.
In December Dragon Oil agreed a more favourable two-year contract with Naftna Industrija Srbije (NIS) Naftagas for the lease and management of a previously used land rig in the Cheleken area.
Last week, the company reported it delivered a good performance in 2009 as the average daily production rate increased 9% to 44,765 (bopd) barrels of oil per day compared to 40,992 bopd in 2008, hitting the landmark level of 50,000 bopd at the end of the year.
The increase of production was determined by the number of wells drilled and as the last two wells came on stream at the end of the year, they are expected to primarily contribute to average production growth in 2010 rather than 2009. Dragon has sold 10.5 million barrels of crude, which is an improvement of 40% over the previous year.
Dragon Oil expects to complete 11 wells in 2010, intending to give more detailed guidance on production growth and infrastructure projects in the preliminary results statement, which will be released on 23 February 2010.
Dragon Oil (Turkmenistan) Ltd holds 100 percent in and is the operator of the Production Sharing Agreement for the Cheleken contract area offshore Turkmenistan. The operational focus is on the re-development of two oil producing fields, Dzheitune (Lam) and Dzhygalybeg (Zhdanov).
It also holds interests in Blocks 35, 49 and R2 (10%) in the Republic of Yemen.