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Dragon Oil Seen Accepting ENOC Share Purchase Offer
The Independent Committee of UAE-based Dragon Oil has recommended that its shareholders accept an offer made by Emirates National Oil Company (ENOC) for the purchase of 48.5% of company shares. The purchase would give ENOC full ownership of Dragon Oil, as it already holds 51.5%. ENOC offered to pay Dragon, which is listed on the London and Irish stock exchanges, £4.55 in cash for each Dragon share, effectively valuing the company at £2.357bn and putting the purchase price at £1.143bn. ENOC is owned by Dubai’s sovereign wealth fund, Investment Corporation Dubai.
“ENOC is delighted to have agreed to fully acquire Dragon Oil,” Saeed Khoory, Group Chief Executive said announced in a statement issued on 2 November. “This acquisition is an exciting development for ENOC and represents a major step in ENOC’s strategy of building a vertically integrated oil and gas group with a strong upstream position. Dragon Oil’s assets will significantly enhance ENOC’s reserves and production. By achieving full control of Dragon Oil, ENOC will be able to achieve greater operational flexibility to progress the development of the assets further.”
Dragon’s prime asset is the 40,000 b/d Cheleken Contract Area offshore Turkmenistan in the Caspian Sea. It covers an area of 950 sq km and includes the Dzheitun (LAM) and Dzhygalybeg (Zhdanov) oil and gas fields. Dragon Oil holds a 100% interest in, and is operator of, the production sharing agreement (PSA) for Cheleken. Development of the block began in May 2000.
In its 2009 interim report issued on 17 August and covering the year up to 30 June, Dragon reported a profit of $105mn for the period, compared with $166.9mn for the same period in 2008. It said revenues of $263.5mn had declined by 29% from the previous period in 2008 as a result of significantly lower oil prices, which for the company averaged $50/B during the first half of 2009 compared to $108/B for the first half of 2008. “We maintained our debt-free position with a healthy cash balance of $875.4mn as of 30 June 2009,” the report said. “This strong financial position will allow us to finance internally our aggressive capital expenditure programs to fuel the group’s organic production growth in the coming years.”
Gross field production rose by 11% year-on-year to 7.7mn barrels, an average of 42,808 b/d compared with 7.0mn barrels or 38,382 b/d for the first half of 2008. “The entitlement production for the first half of 2009 was approximately 65% of the gross production compared to 54% for the comparable period in 2008,” the report said. “The entitlement barrels are dependent, amongst other factors, on operating and development expenditure in the period and realized crude oil prices. In the first half of 2009, lower oil prices, than in first half of 2008, resulted in higher entitlement barrels.”
Other recent developments in the Caspian and Black Sea regions include:
KazMunaiGas Exploration Production on 2 November reported preliminary production results for the first three quarters of 2009 saying output totaled 8.664mn tons (233,700 b/d) of crude oil, including the company’s 50% shares in Kazgermunai and CCEL (Karazhanbasmunai). The amount is 266,000 tons less than KMG EP produced during the same period last year. The company said the production decline was in line with its budget.
The Caspian Pipeline Consortium (CPC) transported an average of 744,242 b/d of Kazakh and Russian crude oil during October, compared with 745,992 b/d in September. A total of 23,071,494 barrels of Caspian Blend was shipped through the 1,510km pipeline, compared with 22,379,768 barrels in September. The bulk of crude shipped through the CPC is of Kazakh origin, but Russian companies TNK-BP, Rosneft and Surgutneftegas also export through the pipeline. The CPC transported a total of 31.5mn tons of crude during 2008, compared with 32.6mn tons in 2007.
Georgia’s Batumi Oil Terminal (BOT) shipped 572,881 tons of crude oil products during October, compared to 508,204 tons in September. So far this year, shipments through the BOT have increased by 31% over 2008, according to Reuters
. The Black Sea terminal was closed for several weeks as a consequence of the Georgia-Russia war in August 2008. BOT shipped a total of 7.2mn tons in 2008 compared to 9.5mn tons in 2007. Kazakhstan’s state-owned oil and gas company, KazMunaiGaz, has owned BOT since February 2008. Crude and products shipped through the BOT arrive by rail from Kazakhstan, Turkmenistan and Azerbaijan.
Tethys Petroleum on 27 October announced that testing of two zones has begun on its AKD01 well, drilled to a depth of 3,414ms in the Akkulka Block in Kazakhstan.
Karachaganak Petroleum Operating (KPO) announced on 28 October that it had suspended the formal arbitration process against the Kazakh government in a dispute over $1bn in export duties paid by the consortium between May 2008 and January 2009. KPO said it had resumed direct discussions with the government for the purpose of finding an amicable settlement. The consortium, which produces gas and condensate from the Karachaganak field in northwestern Kazakhstan, is led by BG Group and Italy’s Eni, with partners Chevron and Lukoil.
Roxi Petroleum on 30 October announced it had spudded well number 20 on the Ravninnoe Contract Area in western Kazakhstan. The well is being drilled by Ravninnoe Oil, in which Roxi holds a 30% interest. The Ravninnoe field was discovered in the late 1980s and holds up to 57mn barrels of oil in place, with reserves of only 3.7mn barrels proven+probable+possible, Roxi said in a statement.
Max Petroleum on 2 November announced that drilling had commenced of the ZMA-AN2 development well in the Zhana Makat field on its Blocks A&E license area. Max said once the ZMA-AN2 well is completed, the rig will drill a second development well in Zhana Makat before moving to drill the Borkyldakty exploration well and the remainder of the group’s “post-salt exploration portfolio.” The Blocks A&E license area covers a 12,455 sq km area in the Pre-Caspian Basin in western Kazakhstan. Max has one discovery well in Block E in the Zhana Makat field, which came into production in August 2007, producing 2,000 b/d. The discovery has estimated proved and probable reserves of 5.8mn barrels.
Socar Trading CEO Valery Golovushkin on 4 November said Azerbaijan’s state oil company would increase its proportion of Azeri Light crude exports under term contracts to 80-85% of its total shipments to Asia in 2010, versus 60% this year, Reuters
reported. Shipments to Asia will remain at 506mn barrels/month, he said. Mr Golovushkin added that Socar intended to purchase a share in an unidentified Italian refinery during 2010.
© Copyright MEES 2009.
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