Enoc in agreement to buy Dragon Oil for $2.6b

Dubai — Emirates National Oil Company, or Enoc, on Monday said it agreed to buy Dragon Oil for £1.7 billion ($2.6 billion), gaining control over wells in Turkmenistan and exploration projects from Algeria to Iraq.

Dubai-based Enoc, which already holds 54 per cent of Dragon Oil, improved its offer to 750 pence a share compared with the initial proposal of 735 pence a share in March.

This takeover would help downstream-focused Enoc become a fully-integrated global oil and gas company. The offer will be fully financed from Enoc’s existing cash resources and has no pre-conditions, the company said in a statement.

Shares in Dragon Oil jumped as much as 9.6 per cent to 734 pence on the London Stock Exchange on Monday morning. The stock has gained more than 40 per cent since March 13, valuing the company at £3.56 billion. Enoc’s offer values Dragon Oil at around £3.7 billion. That would value the shares not already owned by Enoc at around £1.7 billion. The deal would also require the approval of a majority of minority shareholders.

Dragon Oil, which is mostly focused on Turkmenistan, is working to expand outside Central Asia in a bid to raise oil production to 100,000 barrels a day by next year from almost 79,000 barrels a day last year.

The company has exploration assets in Iraq, Algeria and the Philippines. It has also won consent from the Egyptian authorities last year to search for oil in the Gulf of Suez.

Enoc group chief executive Saif Al Falasi said: “Following our announcement on May 21, outlining a possible cash offer for Dragon Oil, we met with a number of shareholders in order to give them the opportunity to provide feedback. As a direct result of these discussions, we decided to further improve our offer to 750 pence per share, which the Independent Committee at Dragon Oil has recommended.”

“With an uncertain market backdrop, this offer provides Dragon Oil’s minority shareholders certainty and a clear opportunity to realise significant cash today. Enoc’s board and I have great respect for the board and management of Dragon Oil and we look forward to working with them and the Independent Committee on successfully completing this recommended offer.”

Thor Haugnaess, chairman of the Independent Committee said: “The Independent Committee believes that Enoc’s cash offer, which is the result of extensive negotiations between the Independent Committee and Enoc, reflects the achievements and future prospects of the Dragon Oil Group and offers Dragon Oil minority shareholders an opportunity to exit at an attractive price.”

— abdulbasit@khaleejtimes.com