Dragon Oil (LON:DGO) this morning unveiled a sharp rise in production after five new wells came online in the first quarter.
Average daily output was 70,600 barrels of oil per day, up from 57,800 in the same period last year, the company reported.
This puts the group firmly on course to hit its medium-term target of 100,000 in 2015.
It achieved an average price of US$107 a barrel for its output, a small discount to Brent crude prices, which hovered around US$118 a barrel for the first three months of the year.
This meant Dragon was hugely cash generative – bumping its cash pile to US$1.65 billion in the bank as at March 31 compared with US$1.53 billion at the end of last year. It invested US$84 million on capital projects.
Updating the City on Dragon’s progress, chief executive Dr Abdul Jaleel Al Khalifa said: "We have maintained a strong level of gross production in the first quarter of this year, supported by solid performance from the Dzheitune (Lam) area and good progress of the drilling programme.
“Strong initial flow rates from the Dzheitune (Lam) C/167 well prove the prolific nature of the Dzheitune (Lam) C platform location.
"A number of wells are scheduled to be completed before the end of the year giving us confidence in our guidance for gross production growth of 15 per cent for 2012.
"We have commenced tendering for a significant number of projects, including new wellhead and production platforms and associated pipelines, drilling rigs, onshore infrastructure. The group has also received the approval to start tendering for the gas treatment plant."
Dragon’s main interest is Cheleken Contract Area in the eastern section of the Caspian Sea, off the coast of Turkmenistan.
Its two producing oilfields are Dzheitune (Lam) and Dzhygalybeg, which were first discovered in the 1960s and ‘70s.
Since 2000, Dragon has increased production ten-fold by introducing modern drilling techniques and targeting previously undrilled areas, such as the Dzheitune (Lam) West.
Recently the firm expanded its interests by becoming a member of the Bargou joint venture in off the coast of Tunisia.
The gas plant is part of Dragon’s “gas monetization” programme, which could ultimately see this by-product of mainstream oil production sold for export.
In a wide-ranging statement to the City Dragon also revealed later this year it will start the next cycle of tendering for additional new wellhead and production platforms to be installed in the Dzheitune (Lam) field.
For 2012, the target is to achieve a 15 per cent increase in gross production based on 13 new wells, including two sidetracks of existing wells.
