Dragon seeks assets outside Caspian
Posted: 03 October 2005
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Dragon Oil, which operates in Turkmenistan , is looking for oil and gas acquisitions outside the Caspian Sea in an effort to improve the group's risk profile, according to a report in today’s Financial Times.
Hussain Sultan, Chairman and Chief Executive of the Dubai-based group, is quoted by the newspaper as saying: "We have always been aware that we cannot go on with just one asset in the company. Now we are in a position to invest in other assets."
He said he was on the lookout for opportunities in the areas of the Middle East and North Africa that were less risky than the Caspian region.
London listed Dragon Oil's principal asset is the offshore Cheleken area of Turkmenistan . During the first half of the year, Cheleken produced an average of 19,533 barrels of oil per day (bopd), 14,044 bopd of which was attributable to Dragon. In the first half of 2004 production from the area was 10,879.
Sultan said production would have risen further if it had not been for technical problems and that production would reach an average of 23,000 bopd by the end of the year. "I hope that the next half will show even better results," he said.
Turnover for the first half was up from $34.8 million to $112.8 million thanks to higher production and oil prices. Pre-tax profit increased from $15.3 million to $71.4 million.
Next year the company planned to start using a second jack-up drilling rig "with the objective of accelerating field development and improving production", said Dragon.
In a comment on Dragon Oil, the Financial Times said: “Dragon Oil shares have gained more than 160 per cent since the start of the year, in spite of some problems meeting growth targets at its Caspian Sea operations. The shares are still cheap relative to some of its peers, however, reflecting the risks associated with a single-asset company.
“If Dragon can make the most of the large potential oil reserves at Cheleken and follow through on its promise to diversify, there could be long-term upside in the stock.”
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