Dragon Oil’s largest shareholder ENOC says no to dividend payment

Dragon Oil Plc’s largest shareholder, Emirates National Oil Co Ltd (ENOC), said the oil producer no longer needed to pay a dividend to shareholders, stepping up pressure in its bid to take over the company.

ENOC, which owns 54 per cent of Dragon Oil, offered 750 pence per share to buy out minority shareholders in June. Major investors Baillie Gifford and Setanta Asset Management see that offer as inadequate.

ENOC’s majority stake in Dragon Oil would allow it to vote against any proposal to pay dividends at the company’s annual general meeting.

First Energy analyst Stephane Foucaud said ENOC’s statement could be part of a strategy to convince hesitant shareholders to accept its offer.

The takeover would help downstream-focused ENOC become a fully-integrated global oil and gas company.

Dubai-based ENOC also said Dragon Oil’s capital expenditure budget of $700m would not be enough to deal with the operational challenges that it expects Dragon Oil to face.

Dragon Oil, which produces oil from the Cheleken field in Turkmenistan, targets production of 100,000 barrels of oil per day over the next five years. ENOC said it would lower that target to about 90,000 barrels.

Dragon Oil declined to comment, while Baillie Gifford said its stance remained unchanged.

The company’s shares were trading marginally higher at 726 pence on Thursday morning.