Dragon: Time to consider takeovers

DRAGON Oil, a Caspian Sea oil explorer with $1.5 billion (€1.04bn) in cash, said the time is right to consider acquisitions given the recent drop in stock markets, according to its chief executive.

First-half earnings more than doubled to $309.4 million, from $137.6m last year, Dragon said yesterday. The company reported record $527.4m revenue in the period and expects to beat its 20% production growth forecast this year, he said.

“There could be opportunities” to acquire assets, Abdul Jaleel Al Khalifa said. “We are sharpening our pencil. It is time.”

Global equity markets lost more than $7 trillion in a two-week selloff through Tuesday on the slowing US economy and the deepening European debt crisis.

Brent oil prices dropped about 11% in the period, prompting investors to sell some oil exploration company shares, making fundamental valuations attractive, according to analysts.

Dragon shares rose the most in more than a month, climbing 8.1% to 464.75 pence in London.

Dragon is on the way to report its second best year if oil prices stay around $100 a barrel through 2011, Mr Al Khalifa forecast. Brent oil has so far averaged $111.82 a barrel this year and traded at $105 a barrel in London.

“There is a big change in the market,” Mr Al Khalifa said. “If the crude price is maintained at $100 plus, we definitely believe that our revenue and our profit this year will be in the same line as we did at the first half of the year.” At the same time, the company is “comfortable” with lower oil prices, he said.

He expects major shareholders, such as Emirates National Oil, to maintain their holding in the company. “For us there could be protection because some shareholders” will keep investment in the company.