Workovers, sidetracks lift CCA production

Dragon Oil continues to raise production from its Cheleken Contract Area fields in the Turkmen sector of the Caspian Sea.

Offshore staff

ASHKABAT, Turkmenistan -- Dragon Oil continues to raise production from its Cheleken Contract Area fields in the Turkmen sector of the Caspian Sea. During the first quarter of this year, gross output was up 9% on the comparable figure for 1Q 2009.

This year the company has added workovers and sidetracks to its rolling development drilling program, in addition to its targeting of completing 11 new development wells by year-end.

Three rigs are currently in service. The Iran Khazar is currently preparing to start a sidetrack of well Dzheitune (Lam) A/129 which should be completed by June. It should then drill and complete a further two wells by year-end.

Rig 40 has been skidded to a new slot on the Dzheitune (Lam) 13 platform where it has begun drilling the Dzheitune (Lam) 13/144 well. Thereafter it will sidetrack up two existing wells on the same platform in order to enhance production.

The jackup Astra, operating on a six-month basis, recently spudded the Dzheitune (Lam) B/145 well. On completion, the rig will be de-mobilized. Dragon has contracted the platform-based NIS rig for two years: mobilization to the Dzheitune (Lam) 28 platform has been subject to delays, but this rig should still complete four wells by year-end.

The development program incurred capital expenditure of $67 million during the first quarter of this year, nearly 70% of this attributable to drilling. Infrastructure spending included upgrading of the processing facility and installation of the Dzheitune (Lam) B platform and in-field pipelines.

Dragon expects to commit around $250 million this year to infrastructure projects, dominated by the award of two new production platforms Dzheitune (Lam) C and Dzhygalybeg (Zhdanov) A. It foresees total capex on infrastructure during 2010-12 of $600-700 million. Over this period it is aiming for average production growth of 10-15%.

4/22/2010

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