Pre-tax profits fall by 20 per cent at Dragon Oil
Exploration group hit by crude oil pricing agreement
Dragon Oil has reiterated its production targets for the second half of 2013
Dragon Oil, the oil and gas exploration company, has reported a pre-tax profit of $329 milllon (€248m) for the first half of the year, down by 20 per cent on 2012, as the company was impacted by a lower sale price for oil.
Revenues declined by 16 per cent in the six months to June 30th 2013, “due to lower realised crude oil price of $86/barrel”.
Dr Abdul Jaleel Al Khalifa, chief executive officer of Dragon Oil, says that the results reflect “the impact of slower than expected progress on the awarding of infrastructure projects and a revised pricing structure under the current crude oil marketing agreement”. The company expects that over the course of the agreement, which is due to expire on December 31st 2014, the discount to Brent will range between 14 and 21 per cent.
The exploration group achieved average gross production growth of 15 per cent during the first half of the year, at approximately 73,600 barrels of oil per day. It has reiterated its growth target for 2013 at the lower end of the medium-term range of 10 to 15 per cent.
Also in the second half of the year, Dragon Oil expects to award a number of contracts for the construction of platforms and the gas treatment plant.
“We also monitor closely alternative marketing routes and engage with market participants with an aim to diversify future export routes,” Mr Al Khalifa said, adding that a production test of the Hammamet West-3 well is due to commence soon in the Bargou Exploration Permit, offshore Tunisia with initial results to be available shortly thereafter. In Iraq, the consortium is undertaking necessary work to secure a drilling rig to spud an early well. In Afghanistan, Dragon Oil hopes to conclude the negotiations in the third quarter of this year and sign the contract for the two blocks with its partners.
Dragon Oil is to pay shareholders an interim dividend of 15 cents.