Production is steadily ramping up at Dragon Oil (LON:DGO), the international oil and gas exploration, development and production company revealed in a first quarter trading statement.
The average gross production rate in the first quarter of 2013 was around 71,800 barrels of oil per day (bopd), up from 70,600 bopd in the corresponding quarter of 2012.
Two new development wells were put into production during the quarter, resulting in average gross production cranking up to 74,000 bopd in March. By the end of the quarter, daily production was up to around 76,400 barrels.
With Brent crude averaging about US$112.60 per barrel during the first quarter of 2013, the average provisional realised crude oil price during the quarter was around US$92 a barrel (bbl), down from US$107/bbl the year before.
The group said capital expenditure on infrastructure and drilling in the first three months of the year totalled around US$457mln. The infrastructure spend in 2013 is expected to amount to around US$200mln, with about US$300mln to be spent on drilling.
At the end of the quarter, cash and cash equivalents and term deposits stood at US$1,579mln, versus US$1,737mln at the end of 2012.
Other highlights of the year so far include an agreement to secure a reliable marketing route for all its anticipated export entitlement production from the Cheleken contract area until 31 December 2014, and the commencement in early April 2013 of drilling of the Hammamet West-3 exploration well, offshore Tunisia in the Bargou exploration permit.
Dr Abdul Jaleel Al Khalifa, Dragon Oil’s chief executive officer, revealed that initial results from the drilling in the Bargou permit are expected towards the end of the second quarter of 2013, with more detailed analysis to follow.
“Drilling activity is expected to pick up in the second half of the year with the arrival of the two platform rigs secured for drilling in the Dzhygalybeg (Zhdanov) field and the Caspian Driller jack-up rig.
“In Iraqi Block 9, the joint management committee and the partners agreed to conduct the necessary work to enable the drilling of an early well - this reflects the confidence in the existing geological data for the block," he added.
For 2013, the board has indicated that growth in production will be towards the lower end of its medium-term guidance range of 10-15% on average per year.
The board of Dragon Oil has recommended a final dividend for 2012 of 15 cents, unchanged from the interim dividend.
Shares in Dragon Oil rose 1% to 610.5p in early trading.