Dragon Oil recorded a 41 per cent increase in pretax profits last year, boosted by higher oil production and rising commodity prices.

In its full-year results released yesterday, Dragon, which has a licence to drill for oil in the Cheleken Contract area of Turkmenistan, revealed pretax profit of $212.2 million (€161.3 million). This figure came in slightly behind analysts' expectations, though Gerry Hennigan at Goodbody said it was more of a technical issue relating to the timing of oil sales rather than a reflection on the group's performance.

Revenue last year increased 29 per cent, to $320.1 million, a gain the company attributed to rising commodity prices.

Average gross production during the year was 20,514 barrels of oil per day (bpd), a 6 per cent increase over 2005. Of this 15,115 bpd was attributable to Dragon. Average prices for the year were 26 per cent ahead, at $61.3 per barrel.

Dragon's chairman, Hussain M Sultan, welcomed the results, saying 2006 was another year of good financial and operational performance.

The company plans to accelerate its field development programme, which envisages the drilling of as many as 25 development and appraisal wells between 2007 and 2009. At a cost of $500 million, Dragon expects this programme to increase its daily crude oil production by about 25 per cent year-on-year.

Mr Sultan said Dragon is currently looking at the possibility of buying its own rigs as the poor availability of drilling tools is holding back development.

Mr Sultan also said Dragon is keen to expand its geographical reach and reduce its dependence on one particular project by acquiring licences or stakes in other drilling activities. Unlike most other oil development companies, Dragon has no debt and so is in a good position to make an acquisition.