Oil firm in 25% output rise

Takeover target Dragon Oil has reported a 25% increase in production output for the first half of the year.

The company is currently in an offer period, with its 54% shareholder, the Emirates National Oil Company (ENOC), looking to buy out minority investors for a combined €5.1bn.

Dragon said via a trading update yesterday that its average gross production amounted to around 92,060 barrels of oil per day (bpd) in the first six months of 2015. This was up from 73,440 bpd for the same period last year.

Dragon said that average gross production for the month of June amounted to 98,890 bpd (last June saw a total of 76,100 bpd) and that June 9 saw production reach 100,658 bpd — a milestone for the company.

“We are aiming to maintain the average daily gross production at around 100,000 bpd for the remainder of the year and sustaining this plateau thereafter for a minimum of five years,” said chief executive Abdul Jaleel Al Khalifa.

Yesterday’s update also showed that Dragon’s first-half capital expenditure — on exploration, drilling, and infrastructure — was unchanged on the same period last year, at $313m.

The company’s cash balance, as of the end of June, stood at just under $1.86bn, down from $1.97bn this time last year.

Dragon is set to drill and complete between 15 and 18 wells this year.

Meanwhile, French investment firm Syquant Capital is the latest of Dragon’s minority investors to come out in favour of ENOC’s 750p per share offer for the company, calling it a fair offer that “fully reflects the value of the company”.

Syquant’s views are similar to those of hedge-fund manager Man GLG. Dragon’s largest minority shareholders, Scottish firm Baillie Gifford, and Dublin-based Setanta Asset Management, had previously suggested the offer undervalued the company.

Elsewhere, Providence Resources has announced the receipt of an 18-month extension, to the end of next November, to a licensing option it owns around 125km off the south coast of Ireland.

The ‘13/04’ option, located in the south Celtic Sea Basin, holds an estimated 1.36bn barrels of stock tank original oil in place.

The additional time will allow Providence to complete a number of further technical studies on the option area, which includes the Silverback exploration prospect, the most important of which is a ‘lower jurassic’ source rock expulsion model.