Dragon Oil : Trading Statement

14 July 2015

(the 'Company' or together with its subsidiaries 'Dragon Oil' or the 'Group')

Trading Statement

Dragon Oil plc (Ticker: DGO), an international oil and gas exploration, production and development company, today issues the following trading statement, which includes an operational update and financial highlights for the six months' period ended 30 June 2015. All information referred to in this update is unaudited and subject to further review.

Key operational highlights

· Average gross production rate of approximately 92,060 barrels of oil per day ('bopd') in 1H 2015 compared to 73,440 bopd in 1H 2014;

· Average gross production for June 2015 was 98,890 bopd (June 2014: 76,100 bopd);

· Gross production rate of 100,658 bopd achieved on 9 June 2015;

· Six wells were completed from 1 January 2015 to-date.

Key financial highlights

· Capital expenditure on infrastructure, drilling and exploration assets amounted to US$313 million for 1H 2015 (1H 2014: US$313 million);

· Group's cash balance (net of abandonment and decommissioning funds) as at 30 June 2015 was US$1,856 million (31 December 2014: US$1,975 million).

Dr Abdul Jaleel Al Khalifa, CEO, commented:

'At the beginning of June 2015 we achieved a production level of 100,658 bopd. It is a milestone for Dragon Oil and a testament to the hard work and dedication of our talented people. We are aiming to maintain the average daily gross production at around 100,000 bopd for the remainder of the year and sustaining this plateau thereafter for a minimum of five years.'

OPERATIONAL UPDATE

DEVELOPMENT

Turkmenistan

Production and Entitlement

For 1H 2015, the gross field production averaged 92,060 bopd (1H 2014: 73,440 bopd). Six wells were drilled and completed during the first half of 2015.

The entitlement production for 1H 2015 was approximately 68% (1H 2014: 52%) of the gross production. Entitlement barrels are finalised in arrears and are dependent on, amongst other factors, fiscal terms of the Production Sharing Agreement, operating and development expenditure in the period and the realised crude oil price. Entitlement barrels in 1H 2015 are higher due primarily to lower realised crude oil prices.

Marketing

Dragon Oil sold 10.2 million barrels of crude oil in 1H 2015 (1H 2014: 5.9 million barrels). The increase in the volume sold over the comparable period is due to higher entitlement despite movement in the lifting position.

In 1H 2015, Dragon Oil exported 87% (1H 2014: 100%) of its crude oil production through Baku, Azerbaijan with the balance of volumes exported through Makhachkala in Russia (1H 2014: nil).

The Group was in an underlift position of approximately 2.9 million barrels of crude oil as at 30 June 2015 (31 December 2014: underlift position of 2.1 million barrels of crude oil).

In December 2014, the Dragon Oil Group reached a one-year agreement with two buyers for all of its anticipated entitlement export production in 2015, achieving a diversification in its export marketing routes, via Baku, Azerbaijan as well as via Makhachkala, Russia. The current contracts are valid until 31 December 2015. Negotiations on the new marketing agreements resulted in a better overall discount to monthly average Brent prices compared to the discount achieved in 2014, and the discount to Brent is expected to be approximately US$13.50 - US$14.00 per barrel in 2015.

Drilling

Since the beginning of the year, Dragon Oil has completed six wells in the Dzheitune (Lam) and Dzhygalybeg (Zhdanov) fields. The following table summarises the results of the drilling programme:

Production has been added through additional perforations in certain existing wells as well as four jet pump installations in the area.

Post completion of the Dzheitune (Lam) 22/194 well by Land Rig1 in December 2014,an additional perforation was performed in late May followed by jet pump application in early June resulting in current production of 1,398 bopd.

The Caspian Driller is expected to commence operations in 3Q 2015.

The Group is working with its contractor and anticipates to resolveintermittent issues with certain critical equipmenton the Land Rig 2.

Water injection project and artificial lift

The water injection pilot project is progressing in the pilot Dzheitune (Lam) 75 area. The acquisition of additional water injection facilities to be installed and commissioned in the Dzheitune (Lam) field is progressing with the intention to procure these facilities later in 2015. The aim of the water injection programme is for pressure maintenance, to arrest reservoir pressure decline, to sustain production rates and increase reserves recovery.

Four jet pumping systems have been installed, including one system on the Dzheitune (Lam) 22 platform, while additional jet pumping systems are currently being installed and expected to be commissioned during 2H 2015 on other platforms. The objective of this artificial lift application is to increase production and enhance recovery.

In parallel, Dragon Oil is procuring electric submersible pumps (ESP) with an aim to commence their application in a pilot in 2H 2015.

Infrastructure

Fabrication work is ongoing for the new wellhead and production platform Dzheitune (Lam) E and associated pipelines, awarded in February 2014. The platform will have eight slots with provision for another four slots to be installed later, and is suitable for drilling by a jack-up drilling rig.Construction and installation are expected to take two years; it is anticipated that the platform will be ready in 1H 2016.

Installation of the Dzheitune (Lam) F production platform has progressed and the platform is ready for drilling.

We are currently conducting tenders to award contracts to extend the Dzheitune (Lam) A and B platforms with an aim to add slots for future drilling.

Work to quadruple our crude oil storage capacity at the Central Processing Facility is ongoing. The tank farm is anticipated to be completed in 1Q 2016 of which three tanks will be built on a priority basis and commissioning started by end of3Q 2015.

The previously deferred project to build another 30-inch trunkline from the Lam field is now being re-tendered. While the new trunkline will transport oil, water and gas, its principal benefit is to transport more gas onshore, which would otherwise have had to be flared. This gas will feed the planned Gas Treatment Plant, which will have capacity to process 360 mmscf/day of gas. The Gas Treatment Plant will be constructed over three years after the contract has been awarded, and is expected to produce approximately 4,000 barrels of condensate per day. At present, there is no export market for gas. The Group believes that re-tendering for this trunkline in the current lower oil price environment may lead to cost savings.

Dragon Oil is increasing the loading capacity at the Aladja Jetty by installing another 16-inch pipeline and associated loading arms to support export of higher volumes in 2H 2015.

Gas Treatment Plant

The bids foran engineering, procurement, installation and construction projectof the Gas Treatment Plant are in the evaluation stage. We anticipate the construction phase to take three years after the contract is awarded.

EXPLORATION

Iraq

In 2014, the partners in Block 9 in Iraq, announced the discovery of oil in two formations in the consortium's first exploration well, Faihaa-1 in which Dragon Oil holds 30%. Open and cased hole tests were conducted in the Mishrif and Yamama formations with encouraging results. The well has been tested at 5,230 bopd on a 32'/64'choke from the Yamama reservoir. A production completion has been run in the well and the drilling rig has been released. The consortium plans to drill two additional appraisal wells in 2H 2015 in order to fast track the development.

Commencing in 2016, the operator, Kuwait Energy Company, plans to accelerate the first production from the Faihaa field from the three wells utilising a temporary production facility.

Afghanistan

In early 2015, the consortium, comprising Dragon Oil (40%, operator of Sanduqli block), TP Afghanistan Ltd. (TPAL, 40% and operator of Mazar-i-Sharif block) and the Ghazanfar Group (20%), commenced the airborne gravity and magnetic survey in both blocks, which is expected to resume in August pending the delivery of a new contracted aircraft and be completed at the end of 2015.

Tunisia

The joint venture partners (Dragon Oil, 55%; Cooper Energy, 30% and operator; and Jacka Resources Ltd, 15%) are seeking to extend the permit for one year taking it to 6 August 2016 in order to abandon the Hammamet-West 3 well in a rigless operation and to acquire 500 square kilometres of 3D seismic survey to assess further potential.

FINANCIAL UPDATE

Capital expenditure

Capital expenditure for 1H 2015 was approximately US$313 million (1H 2014: US$313 million). Of the total capital expenditure, approximately 47% (1H 2014: 46%) was attributable to infrastructure with 51% (1H 2014: 43%) spent on development and appraisal drilling, the balance was spent on exploration assets. The infrastructure spend during the period included construction of the Dzheitune (Lam) E and infield pipelines, installation of the Dzheitune (Lam) F platform and construction of the tank farm.

Realised prices

The average realised crude oil price during the first half of 2015 was approximately US$44/bbl (1H 2014: US$93/bbl).The weighted average discount to Brent between the two routes was US$13.9 per barrel in 1H 2015 (1H 2014: 15% discount via Baku, Azerbaijan).

MATERIAL EVENTS

Approach from Emirates National Oil Company Ltd L.L.C ('ENOC')

On 17 March 2015, Dragon Oil announced that it had received an approach from ENOC regarding a possible offer for the entire issued and to be issued share capital of Dragon Oil that it does not already own. The proposal received valued Dragon Oil at 650 pence per Dragon Oil Share. The Independent Committee rejected this proposal, engaged in extensive discussions with ENOC, and undertook shareholder consultation regarding the approach.

On 21 May 2015, after a series of further proposals which were also rejected, ENOC announced a revised proposal of 735 pence per Dragon Oil Share. This revised proposal represented a substantial improvement on ENOC's initial proposal. The Independent Committee considered this proposal and again consulted with shareholders as part of its assessment.

On 15 June 2015, the Independent Committee and ENOC announced a recommended cash offer by ENOC of 750 pence per Dragon Oil Share.

In coming to a view on its recommendation, the Independent Committee had taken into account the value being offered by ENOC today and the Independent Committee's views on the current position and the future prospects of Dragon Oil. The Independent Committee, assisted by its financial advisers, Nomura and Davy Corporate Finance, had modelled numerous macro and operational growth scenarios and undertaken a detailed valuation exercise of the assets and prospects of the Dragon Oil Group. In addition, the Independent Committee had engaged with minority shareholders throughout its consideration of the proposed transaction.

The Independent Committee has confidence in the management of Dragon Oil and the future prospects of the Dragon Oil Group and is of the view that the Offer reflects these prospects, offering Dragon Oil minority shareholders an attractive exit price, and is in the best interests of Dragon Oil minority shareholders as a whole.

The document containing (among other things) the full terms of, and conditions to, the Offer and the procedures for acceptance (the 'Offer Document') was posted by ENOC to Dragon Oil Shareholders together with the Form of Acceptance on 1 July 2015.

The Offer will initially remain open for acceptance until 3:00pm (Irish time) on 30 July 2015.

The procedure for acceptance of the Offer is set out in paragraph 10 (Procedure for acceptance of the Offer) of Part II of the Offer Document and in the Form of Acceptance.

The Offer Document and Form of Acceptance are available for inspection at the offices of Arthur Cox, Earlsfort Centre, Earlsfort Terrace, Dublin 2, Ireland and of Mason Hayes & Curran, South Bank House, Barrow St, Dublin 4, Ireland during normal business hours on any weekday (Saturdays, Sundays and public holidays excepted) until the end of the Offer Period, and at www.dragonoiloffer.com andwww.dragonoil.com/investors. For the avoidance of doubt, the content of such website is not incorporated into, and does not form part of, this announcement.

Defined terms used but not defined in this announcement have the meanings set out in the Offer Document.

OUTLOOK

On 15 June 2015, Dragon Oil updated its target for average production growth for 2015 to be around 15%.We expect to drill and complete between 15 and 18 wells; we will continue to add perforations in existing wells to maintain and grow production.

The Group maintains its guidance for an exit rate of 100,000 bopd - the level we first achieved on 9 June 2015 - in 2015 and plans to sustain the 100,000 bopd average gross production for a minimum of five years from 2016.

Capital expenditure for infrastructure and drilling excluding the Gas Treatment Plant cost in Turkmenistan in 2015 is estimated to be at the upper end of the US$500mn to US$600mn guidance at around US$600mn and around US$50-100mn for exploration assets.

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For further information please contact:

Investor and analyst enquiries

Dragon Oil plc (+44 (0)20 7647 7804)

Anna Gavrilova

Media enquiries

Citigate Dewe Rogerson (+44 (0)20 7638 9571)

Martin Jackson

About Dragon Oil

Dragon Oil plc is an international oil and gas exploration, development and production company, quoted on the London and Irish Stock exchanges (Ticker symbol: DGO). Its principal producing asset is in the Cheleken Contract Area, in the eastern section of the Caspian Sea, offshore Turkmenistan.

Dragon Oil (Turkmenistan) Ltd., a wholly owned subsidiary of Dragon Oil plc, holds 100% interest in, and is the operator of, the Production Sharing Agreement for the Cheleken Contract Area. The operational focus is on the re-development of two oil and gas producing fields, Dzheitune (Lam) and Dzhygalybeg (Zhdanov).

The Group has exploration blocks in Tunisia, Iraq, Afghanistan, Egypt, the Philippines and Algeria. Dragon Oil's diversification strategy is to add exploration and production assets within Africa, parts of Asia and the Middle East in order to create a diversified and balanced portfolio of assets for the Group.

www.dragonoil.com

Disclaimer

This news release may contain forward-looking statements concerning the financial condition and results of operations of Dragon Oil. Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. No assurances can be given as to future results, levels of activity and achievements and actual results, levels of activity and achievements may differ materially from those expressed or implied by any forward-looking statements contained in this report. Dragon Oil does not undertake any obligation to update publicly or revise any forward-looking statement as a result of new information, future events or other information.

Legal Information

The directors of Dragon Oil accept responsibility for the information contained in this announcement. To the best of the knowledge and belief of the directors of Dragon Oil (who have taken all reasonable care to ensure such is the case), the information contained in this announcement is in accordance with the facts and does not omit anything likely to affect the import of such information.

The members of the Independent Committee accept responsibility for the information in relation to the Offer contained in this announcement. To the best of the knowledge and belief of the members of the Independent Committee (who have taken all reasonable care to ensure that such is the case), the information contained in this announcement for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.

Nomura, which is authorised by the Prudential Regulation Authority and regulated in the United Kingdom by the Financial Conduct Authority and Prudential Regulation Authority, is acting exclusively for the Independent Committee and no one else in connection with this announcement and will not be responsible to anyone other than the Independent Committee for providing the protections afforded to clients of Nomura nor for providing advice in connection with this announcement or any matter referred to herein.

Davy, which is authorised and regulated by the Central Bank of Ireland, is acting exclusively for the Independent Committee and no one else in connection with this announcement and will not be responsible to anyone other than the Independent Committee for providing the protections afforded to clients of Davy nor for providing advice in connection with this announcement or any matter referred to herein

Dealing Disclosure Requirements

Under the provisions of Rule 8.3 of the Irish Takeover Rules, if any person is, or becomes, 'interested' (directly or indirectly) in 1 per cent. or more of any class of 'relevant securities' of Dragon Oil, all 'dealings' in any 'relevant securities' of Dragon Oil (including by means of an option in respect of, or a derivative referenced to, any such 'relevant securities') must be publicly disclosed by not later than 3:30 pm (Irish time) on the 'business day' following the date of the relevant transaction. This requirement will continue until the date on which the Offer becomes effective or on which the 'offer period' otherwise ends. If two or more persons co-operate on the basis of any agreement, either express or tacit, either oral or written, to acquire an 'interest' in 'relevant securities' of Dragon Oil, they will be deemed to be a single person for the purpose of Rule 8.3 of the Irish Takeover Rules.

Under the provisions of Rule 8.1 of the Irish Takeover Rules, all 'dealings' in 'relevant securities' of Dragon Oil by ENOC, or by any party 'acting in concert' with either of them, must also be disclosed by no later than 12 noon (Irish time) on the 'business day' following the date of the relevant transaction.

A disclosure table, giving details of the companies in whose 'relevant securities' 'dealings' should be disclosed, can be found on the Panel's website at www.irishtakeoverpanel.ie.

'Interests in securities' arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an 'interest' by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities.

Terms in quotation marks are defined in the Irish Takeover Rules, which can be found on the Panel's website. If you are in any doubt as to whether you are required to disclose a dealing under Rule 8, please consult the Panel's website at www.irishtakeoverpanel.ie or contact the Panel on telephone number +353 1 678 9020 or fax number +353 1 678 9289.