‘Detailed talks’ on bid for oil explorer

Dragon Oil has said it remains in "detailed discussions" with its backers over a proposed bid for Irish exploration firm Petroceltic.

The Dubai-based explorer — which also has its shares listed on the Irish Stock Exchange — said last week it was considering making a cash 230p per share/€636m takeover offer for Petroceltic, a transaction which would extend Dragon’s geographical reach to southern Europe, Northern Africa, and Kurdistan.

Dragon — which has undertaken due diligence regarding the Dublin firm — is talking with the Emirates National Oil Company, which owns 54% of its business. It would also need to gain approval from the Algerian government, given the amount of assets held in that country by Petroceltic.

While some analysts feel the 230p proposed offer undervalues Petroceltic, the board has conditionally welcomed the approach.

London-based brokerage Peel Hunt said last week that a price of 250p per share would represent a fairer deal for Petroceltic.

Meanwhile, in a fresh trading update, Dragon yesterday maintained its guidance for annual production growth for 2014 of 5%-10%, with a year-end exit rate of between 87,000 and 90,000 barrels of oil per day targeted.