Higher prices yield Dragon record profits

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The Independent Online

Dragon Oil, the oil exploration and production group focused on the Caspian Sea, is poised to expand its business interests in the area after posting record full-year profits. The strong oil price and increased production saw it post 2005 pre-tax profits of $159.3m (£89.6m), an increase of 220 per cent on 2004 numbers.

The chairman and chief executive, Hussain Sultan, said: "While we're confident of the long-term potential and value of our existing assets, our plans for the future include looking at other acreage to expand and diversify Dragon's asset base."

The company is looking at ways to commercialise its associated gas production in the Caspian Sea region, the majority of which is flared and brings the company no revenue.

Dragon reported total production of 7.1 million barrels of oil in the past year, an increase of 44 per cent on the previous year, as well as significantly increased reserves now totalling 651 million barrels and 3.5 trillion cubic feet of gas. The reserves are held mainly in wells in the Cheleken Contract Area of the Caspian Sea off the coast of Turkmenistan, of which Dragon's share is about 323 million barrels.

Net cash at the year-end totalled $218.2m after the company paid back a $27.6m loan provided by the European Bank of Reconstruction and Development. The company will not pay a dividend.