Dragon Oil agrees to Enoc's increased takeover offer

16 June 2015

Enoc to acquire independent oil company

  • Dubai-based Dragon Oil has accepted a £2.7bn ($4.2bn) takeover bid from Enoc
  • Enoc will pay £1.7bn for the 46.1 per cent of shares it already owns
  • Minority shareholders will vote on the £7.50 a share offer

Dubai-based Dragon Oil has accepted a £2.7bn ($4.2bn) takeover offer from Emirates National Oil Company (Enoc).

It will be financed by Enoc’s existing cash reserves.

Enoc already owns 53.9 per cent of listed Dragon Oil shares. It will pay another £1.7bn to acquire remaining shares at £7.50 a share.

The remaining shareholders will have to approve the offer. Dragon Oil is listed on the London and Irish Stock Exchanges. The share price rose by 9 per cent following the announcement.

Enoc approached the company in March 2015, offering £6.50 a share. The offer was increased to £7.35 a share in May.

“These shares were basically worthless in the 1990s, so the offer is a great return on investment,” says a Dragon Oil shareholder. “Enoc has finally realised that if they offer a fair price then the shareholders will sell.”

Enoc made a offer worth £1.1bn, or £4.55 a share, in 2009. It was rejected by the shareholders.

Dragon Oil reported 2014 profits of $579m.

The company owns a production-sharing agreement (PSA) for the exploration, development and production of oil and gas resources in the Cheleken area of the Caspian Sea, in offshore Turkmenistan.

Average daily production there was 94,450 barrels of oil a day in May 2015.

The PSA has an initial term of 25 years and will expire in May 2025. Dragon Oil may negotiate an extension of at least 10 years.

As of 31 December 2014, the Cheleken fields held remaining gross proven and probable reserves of 663 million barrels of oil and condensate and 1.3 trillion cubic feet of gas.

It also has the rights to exploration blocks in Iraq (Block 9), Algeria (Tinrhert Nord Perimeter and Msari Akabli Perimeter), Egypt (East Zeit Bay), Afghanistan (Sanduqli and Mazar-i-Sharif blocks), Tunisia (the Bargou Exploration Permit) and the Philippines (Service Contract 63).

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