Emirates National Oil Company (Enoc) has extended its offer to buy out minority shareholders in Dragon Oil to the end of this month after it failed to garner sufficient votes by its first deadline on Thursday.
Enoc, which owned just under 54 per cent of Dragon Oil when it made its 750 pence (Dh43) per share offer six weeks ago, said it received 14.3 per cent acceptances for its offer by the deadline, short of the level of just more than 23 per cent of acceptances it needed to delist the company and take it private.
Enoc said it would extend its offer on the same terms to August 28, although it had until August 14 to revise its offer under rules of the Irish Stock Exchange, which is the primary listing for Dragon Oil shares.
It is also listed on the London Stock Exchange.
Enoc is attempting for a second time in six years to buy out Dragon Oil’s minority shareholders. The three largest minority shareholders – Baillie Gifford, an Edinburgh investment firm, Setanta Asset Management of Dublin, and Elliott Advisers, a UK arm of New York billionaire hedge fund manager Paul Singer – hold a total block of just over 16 per cent.
All have declared Enoc’s offer as “inadequate”, arguing that it underestimates the potential of the Dragon Oil’s main asset, the offshore Cheleken oil and gasfield, which lies within Turkmenistan’s maritime borders.
Cheleken recently reached a production level of about 100,000 barrels per day, which Dragon Oil’s management said would be the plateau level of output for some years.
The larger minority investors have argued that the field has the potential to double production over the next decade, which would make it one of the fastest-growing oilfields in the world.
Enoc issued a statement last month saying it believed Dragon Oil should cut production at Cheleken, that it should spend more for development in the coming year and that dividends should be suspended, a move that was described as “a thinly veiled threat” to minority shareholders by Gerry Hennigan, a Goodbody Stockbrokers analyst in Dublin.
Baillie Gifford, the largest minority shareholder with just over 7 per cent, and which led the successful effort to block the buyout offer in 2009, has suggested that Enoc offer minority shareholders a “contingency payment note” that would pay them for upside gains at Cheleken.
Enoc said on Friday that there was an additional 2.5 per cent of shareholders who accepted the offer but were not officially counted because paperwork was faulty. Adding that to the 14.3 per cent of official acceptances means that Enoc needed another 6.5 per cent, approximately, of the 29 per cent still outstanding to have sufficient voting shares to take the company private.
amcauley@thenational.ae
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