Dragon dividends on slow burn as firm eyes acquisitions

By Eduard Gismatullin

The company has raised its first-half payout to shareholders by 67% to 15c a share. Dragon Oil plans to spend $200m (€162m) on buying back 5% of its shares, the Dubai-based explorer said in a statement.

For dividends, “I don’t see the same growth pattern continuing in the future with the same pace”, said CEO Abdul Jaleel al Khalifa.

Dragon has been expanding in Iraq and Tunisia to diversify from its main production base in Turkmenistan.

It plans to bid for exploration licenses in Afghanistan and is looking for possible acquisitions with output expected to rise by as much as 15% a year through 2015. Dragon held $1.7bn in cash as of Jun 30.

“We still want to keep that money to grow the company and always put it in the right place,” said Mr Khalifa. “It’s only two or three acquisitions and all money is gone.”

Dragon had considered expanding in West Africa. In February, it gave up plans to bid for BowLeven Plc, a driller working in Cameroon.

If Dragon meets its production forecast with the oil price averaging at $95 a barrel, it “will end up with a $4bn cash pile, representing 85% of current market” value, according to Tao Ly, a London-based analyst at Nomura International Plc.

— Bloomberg