Dragon Oil reveals production growth in 2012

Dragon Oil on Tuesday said it was 'pleased' with its progress last year as the group remained on track of development projects.

In a trading update ahead of the oil and gas company's 2012 financial results, it reported production growth and a group cash balance of $1.73m, up from $1,52m the previous year.

Business was boosted by a 10% increase in average daily production rate to 67,600 barrels of oil per day for the year, following the development of 15 new wells.

Capital expenditure on infrastructure and drilling totalled $382m for 2012, up from $351m. The company was awarded an exploration contract in Iraq and two blocks in Afghanistan.

Dr Abdul Jaleel Al Khalifa, Chief Executive Officer, said despite the challenges of sand control issues the company was able to restore production to normal levels to achieve an increase in average gross production.

"It is a success story for us to have been able to deal with the problem and to grow production beyond that impact," he said.

He said the intensive drilling campaign conducted last year drove results higher as they secured new contracts.

A $200m share buyback programme was undertaken in June to October to return surplus funds to shareholders, he added.

"We are pleased with the progress made to diversify our portfolio by adding Block 9 in Iraq within a consortium of companies and by being selected as the winning bidder for two blocks in Afghanistan, again in a consortium with other companies.

"We are confident that we will continue to add assets to become a growing multi-asset exploration, development and production company."

Shares climbed 2.325 to 573.00p at 09:35 Tuesday.

RD