Revenues at Dragon Oil up 11% on back of higher oil prices

Revenues at international oil and gas exploration, development and production company, Dragon Oil rose 11 per cent in the six months of 2014, due to better realised crude oil prices and higher sales volumes.

According to the company’s interim results for the six months to June 30th 2014, revenues rose by 11 per cent to $547 million (€407mn), primarily due to higher realised crude oil price of US$93/barrel.

Pre-tax profits rose by 19.5 per cent to $393 million, and average gross production stood at about 73,440 barrels of oil per day (bopd) compared to 73,600 bopd in the same period in 2013. Dragon Oil announced an interim dividend of $0.20 per share, an increase of 33 per cent over the 2013 interim dividend of $0.15.

Dr Abdul Jaleel Al Khalifa, chief executive officer with Dragon Oil, said that higher revenues were driven by better realised crude oil prices and higher sales volumes for its entitlement share of crude oil production from the Cheleken Contract Area in Turkmenistan.

“Sales volumes grew on the account of improved entitlement, which was 52% for the period compared to 44 per cent a year ago. This change was primarily driven by a pick-up in capital expenditure in the Cheleken Contract Area, which more than doubled from the level seen in the first half of last year,” he said, adding that average gross production iwas supported by two successful sidetracks and effective management of the existing production, noting that production is now around 81,000 bopd.

In a note, Gerry Hennigan of Goodbody Stockbrokers said that the latest estimate on production “should serve to allay concern over the ability of Dragon to increase production, which has been hampered by delays to rig deployment over the past year”.

Looking ahead, the company says it hopes to achieve a target of average annual production growth of 10-15 per cent in 2015; to reach an exit rate of 100,000 bopd at the end of 2015 and maintain an average gross production rate of 100,000 bopd for a minimum of five years thereafter; and to actively screen development and exploration opportunities to expand the assets portfolio.