Dragon Oil Updates on Block 9

By John Lee.

In its interim results for the period ended 30th June 2012, Dragon Oil today issued the following update on its business in Iraq:

A consortium of companies, comprising Dragon Oil (30%), the Turkish Petroleum Corporation (TPAO) (30%) and Kuwait Energy (40% and operator), has been awarded an exploration, development and production service contract for Block 9 in Iraq's fourth bidding round.

On 16 July 2012, the Iraqi Ministry of Oil and the consortium initialled the contract for this block. This is the first step in a formal process before the signing of the final contract, which is anticipated later this year.

The consortium's bid for Block 9 was awarded on the basis of a remuneration fee of US$6.24 per barrel of oil equivalent. If Block 9 is found to be commercial during the five-year exploration period, the consortium may make an application to the Iraqi Government to develop the block over a 20-year development period.

Block 9 is located in the Basra province. The block spans over 900 km². The work commitment on the block within the initial five-year exploration period will include de-mining of the area in the first instance, followed by seismic acquisition and interpretation.

Based on this seismic analysis, a location for an exploration well will be selected and drilling performed. The capital expenditure will be incurred in proportion to each partner's share in the consortium and given the exploration nature of the block the cash outflow is not expected to be significant.

(Source: Dragon Oil)

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