Dragon Oil plc (DGO)

DRAGON OIL PLC (DGO)
www.dragonoil.com

Company Information
Dragon Oil plc is an independent oil and gas exploration, development and production company headquartered in the United Arab Emirates. Emirates National Oil Company (ENOC) L.L.C. (“ENOC”), a company owned by the Government of Dubai, has a 51 percent stake in Dragon Oil. The company holds dual listing on the Irish and London Stock Exchanges. Dragon Oil is operational in Turkmenistan and the Republic of Yemen.[i]

Contact Information
Group Headquarters
ENOC House II, 3rd Floor Right Wing,
Sheikh Rashid Road
P.O. Box 34666,
Dubai – U.A.E.
T: +971 4 3053600
F: +971 4 3356954

PB 744013,
9/1, Ata Gowshudow Street
Ashgabat, Turkmenistan
T: +993 12 480633
F: +993 12 480632

History in Turkmenistan
In 2000, Dragon Oil was awarded a 25-year Production Sharing Agreement to explore and develop oil and gas at the offshore Cheleken Contract Area. Dragon Oil was also awarded the exclusive right to negotiate an extension of up to ten years, following the completion of the original 25-year agreement. The Cheleken Contract Area includes two fields—the Dzheitune (Lam) and Dzhygalybeg (Zhdanov)—which together comprise 950 square km.[ii]

In March 2009, Dragon Oil released a statement revealing that senior employees—since fired—in the marketing and contracts department had solicited bribes from contractors.[iii]

Current Scope of Operations
According to Dragon Oil’s website, the company has “invested over US$1.5 billion in expanding oil production in the Cheleken Contract Area, and as such, is one of the largest foreign investors in Turkmenistan. The Group is producing from over 60 wells and has an aggressive development programme comprising drilling new wells and a work-over programme. The average daily Gross Field Production has increased from approximately 7,000 bopd in 2000 to over 71,751 bopd at the turn of 2011-12.”[iv] Dragon Oil has approximately 1,100 employees in Turkmenistan, around 1,000 of whom are Turkmen.[v] In May 2012, it was reported that Dragon successfully completed a new well in the Caspian (Dzheitune) that was drilled to a depth of 2,010 meters.[vi]

Dragon Oil was a “Silver Sponsor” of the 2010 Turkmenistan International Oil and Gas Conference, a “Bronze Sponsor” of the 2011 Turkmenistan Gas Conference, and a “Silver Sponsor” of the 2012 Turkmenistan International Oil and Gas Conference.[vii]

Environmental Concerns
Dragon Oil’s platforms are located to the north of Ogurchinsky Island, which is home to communities of Caspian seals, listed as endangered by the IUCN. In the event of an oil spill or other accident at the Cheleken Field, Ogurchinsky Island could be at risk. Beluga sturgeon also inhabit the sea around the island during the summer months.[viii] According to Dragon Oil’s Environmental Impact Assessment, which was conducted prior to the outset of the project, the major offshore risks of their operations include blowouts, fires, loss of containment from subsea equipment, non hydrocarbon fires in an offshore installation, collisions and structural failure. Onshore risks, according to the EIA, include fires, boilovers, vapor cloud explosions and escalation. Additional risks—both on and offshore—include extreme weather, land erosion, earthquakes, laying of pipeline, and installation of jackets (damage during construction of structures).[ix]

Community Relations
The EIA was published in October 1999, and public consultation meetings took place in accordance with EBRD standards, as the project received financing from the institution. According to the EIA, Dragon Oil consulted with twenty-nine organizations and forty-two specialists during the consultation process. Dragon Oil held public meetings in Ashgabat, Nebit Dag, Turkmenbashi and Cheleken as part of the public disclosure process.[x]

Financial Disclosure
According to the company’s 2011 Full Year Results, Dragon Oil achieved $1151 million in revenues, a 67 percent increase over 2010.[xi] The company, which is debt-free and has $1.34 billion in the bank, has been recommended by its Board of Directors to pay a full-year maiden dividend of 14 US cents/share for 2010, which will cost a total of US $72.2 million. The company’s oil reserves totaled 658 barrels and its gas reserves stood at 1.4tcf as of the close of 2011. [xii]

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[i] Dragon Oil plc, About Ushttp://www.dragonoil.com/About_Us/Default.aspx?id=4. Accessed February 9, 2011.

[ii] Dragon Oil plc,  “About Us”, Dragon Oil; http://www.dragonoil.com/About_Us/Default.aspx?id=4. Accessed July 1, 2012.

[iii] Eurasianet.org, “Turkmenistan: Dragon Oil guilty of ‘certain irregularities’,”24 Mar. 2009,http://www.eurasianet.org/departments/news/articles/eav032409b.shtml. Accessed February 9, 2011.

[iv] Dragon Oil plc, About Us.

[v] Ibid.

[vi] Andre Lamberti, “Dragon Oil completes new development well offshore Turkmenistan.” Proactive Investors, May 16, 2012;http://www.proactiveinvestors.co.uk/companies/news/42896/dragon-oil-completes-new-development-well-offshore-turkmenistan-42896.html.  Accessed July 2, 2012.

[vii] 17th Turkmenistan International Oil and Gas Conference, “Sponsors,” Turkmenistan International Oil and Gas Conference; http://www.oilgasturkmenistan.com/sponsors. Accessed July 5, 2012.

[viii]Crude Accountability, Turkmenistan’s Environmental Risks in the Era of Investment in the Hydrocarbon Sector, Sept. 2007, 11.

[ix]Dragon Oil Block II Field Development Project: Environmental Impact Assessment, Oct. 1999, Appendix G2, Hazard Analysis.

[x]Dragon Oil EIA.

[xi] Dragon Oil plc, About Us.

[xii] Ibid.