Dragon Oil agrees short term swap deal with Iran

The new deal ends uncertainty after an existing long-term deal ended in March, with some industry sources saying the deal was in danger of not being renewed as Tehran looks to boost sales of its own crude.

The company gave no detail on the terms of the new deal or its effect on revenues, in a statement on Thursday, and at 0803 GMT its stock was trading down 3 percent at 461.5 pence a share.

Dragon, however, reported a 9 percent increase in daily oil output to 47,654 barrels (bbls) in the first quarter and said it was “satisfied that there is sufficient capacity in existing marketing routes to satisfy current production”.

The firm said three development wells had come on stream in the first quarter at combined rates of 2,103 bbls, 2,168 bbls and 1,895 bbls, and capital expenditure in the period was $67 million, against $81 million in the same period last year.

Net cash at the end of the quarter was $1.1 billion, with no debt, it added.

Looking ahead, Dragon said it was working towards completing 11 new development wells and up to 3 sidetracks in 2010, and expects to achieve average production growth of 10 percent to 15 percent over the three years 2012.