Dragon Oil achieves new gross peak production record of 40,038 bopd

Hussain M. Sultan, Chairman and CEO of Dragon Oil, commented: "I am very pleased to report that we have delivered on our promise to achieve a production rate of 40,000 bopd by 2008. A new record production of 40,038 barrels of oil was achieved on 31st December 2007 concluding Dragon's year on a high note and enabling us to look forward to 2008 with optimism for continued progress.

"This success is due to the completion of the initial testing of the Dzheitune (Lam) A/123 development well drilled from our Dzheitune (Lam) A production platform. The flow rate from this well is consistent with the results from the previous three wells drilled in this area.

"I am also pleased to announce that we were honoured with a very positive meeting with the President of Turkmenistan on 26th December 2007. His Excellency, the President expressed his support for Dragon Oil's strategy to increase oil production as well as our plans for the utilisation of the considerable gas resources contained in the Cheleken Contract Area."

Drilling update
The well yielded an initial flow rate of 3,284 bopd from the short and long strings. Testing of the individual short and long strings resulted in initial production rates of 1,750 bopd and 1,534 bopd respectively.

The 'Iran Khazar' rig has since skidded to slot 3 on the Dzheitune (Lam) A platform and has spudded a further development well, Dzheitune (Lam) A/125 with a target depth of 4,390 metres.

The 'CIS-1' rig is currently completing the development well, Dzheitune (Lam) 22/124, on the Dzheitune (Lam) 22 platform. Upon completion of this well, the 'CIS-1' rig will drill three additional development wells from this platform before moving to the Dzheitune (Lam) 28 platform.