Dragon confirms approach by Dubai state-owned oil company

DUBLIN-LISTED oil and gas firm Dragon Oil confirmed yesterday it had received a preliminary approach from Dubai’s state-owned Emirates National Oil Company (Enoc) to acquire all the outstanding shares in the company.

The offer would be at a “modest premium” to Dragon Oil’s closing share price on June 3rd, it said yesterday in a statement.

Dragon closed at 338p a share on the day, before jumping to 402.5p after confirming it had received a bid approach.

The company was valued at £2.06 billion as of yesterday’s close.

Enoc currently has a 52 per cent stake in Dragon.

Dragon is primarily focused on exploration and production in the Caspian Sea off the Turkmenistan coast.

“We see Dragon Oil as an excellent acquisition target due to its strong fundamentals,” Pavel Sorokin, a Moscow-based analyst at UniCredit, said yesterday in a note.

“Dragon Oil has production growth potential of around 15 per cent year-on-year, major untapped gas reserves that Turkmenistan is keen on developing, and an excellent management team.”

Dragon increased first-quarter output 19 per cent to an average of 43,787 barrels a day after bringing new wells on stream, the company said in April.

The explorer plans to drill as many as 35 development wells through 2011.

The explorer has been subject to takeover speculation in the past.

Russia’s OAO Lukoil unsuccessfully sought to buy control of the company in 2005, while several oil majors were cited as potential investors in 1997, according to media reports at the time.

Chief executive Abdul-Jaleel Al-Khalifa said in March that Dragon itself was studying purchases of assets and businesses to expand further in central Asia, the Middle East, North Africa and the North Sea.

The explorer said at the time it planned to set up Dragon Oil in Bermuda as a holding company, cutting tax on acquisitions. – (Additional reporting, Bloomberg)