Dragon Oil, the international oil and gas exploration, development and production company, has cut its capital expenditure (capex) forecast for 2015 by as much as 26 per cent, but is targeting 100,000 barrels per day by the end of 2015.
Dragon Oil, which last month dropped its $800m takeover bid for Petroceltic, said that its capex for 2015 will be in the range of $500mn to $600mn on drilling and infrastructure in the Cheleken Contract Area and excluding the cost of the Gas Treatment Plant. This compares with a spend of $677m in 2014.
Listed on the Dublin and London stock exchanges, Dragon Oil completed 14 development and appraisal wells in 2014 and commenced drilling in the Dzhygalybeg (Zhdanov) field. However, while it grew average gross production in the Cheleken Contract Area by 6.8 per cent, it was slower than hoped, Dr Abdul Jaleel Al Khalifa, CEO, said, although drilling accelerated in the second half.
"In December, we reached an agreement with two buyers to export our entitlement share of the crude oil production using two routes. We achieved diversification in export routes and negotiated a better price for our crude," Mr Al Khalifa said.
On the exploration front, Dragon Oil reported "excellent results" in Block 9 in Iraq: together with its partner, Kuwait Energy, it made two oil reservoir discoveries in both targeted formations.
"In partnership with a major European utility company, we won two exploration perimeters in Algeria, a country rich in hydrocarbon opportunities."
On the company's exploration well in the Philippines, Mr Al Khalifa, said that hydrocarbons were not discovered "and we are assessing the remaining prospectivity of the block".
“We also looked at bidding to acquire an E&P company, but subsequently decided against this transaction as the oil price plummeted. We will continue to search for the right fit value-creative development asset.”
Looking to 2015, Dragon Oil’s target is to grow average gross production at around 10 per cent and exit the year at 100,000 bopd. It plans to complete 15 to 20 wells a year in 2015 and 2016 given the present and future availability of drilling rigs.
