Dublin-based Setanta Asset Management has urged other minority shareholders to reject Dubai-based Emirates National Oil Company (Enoc)’s offer to take over Dubai’s Dragon Oil.

Minority shareholders have until 30 July to accept or reject the offer price of £7.5 ($11.58) a share.

Setanta owns 15.2 million shares of Dragon Oil, or 3.1 per cent of shares, making it the second-largest minority shareholder.

The largest minority shareholder, Edinburgh-based Baillie Gifford, says the $4.2bn offer “materially undervalues [Dragon Oil]’s strong growth potential”. Baillie Gifford owns 7.2 per cent of Dragon oil shares on behalf of its client.

Dragon Oil shares on the Irish Stock Exchange fell slightly to €10.16 ($11.17) following Setanta’s statement.

Dragon Oil reported 2014 profits of $579m, thanks to its full ownership of a production-sharing agreement (PSA) for oil and gas resources in the Cheleken area of the Caspian Sea, located in offshore Turkmenistan.

Its average daily production there was 94,450 barrels a day (b/d) of oil in May 2015.

Ballie Gifford sees a high potential for development and production increases in the Cheleken area. It is pushing for a conditional note that would see a payment of £0.5 a share for each incremental 20,000 b/d beyond 100,000 b/d.

Dragon Oil also owns exploration rights in Iraq, Algeria, Egypt, Afghanistan, Tunisia and the Philippines.

Enoc already holds 53.9 per cent of listed Dragon Oil shares. 

The Dubai firm made an offer worth £1.1bn, or £4.55 a share, in 2009, which was rejected by shareholders.