Bidder rules out Dragon Oil dividend pay-out

Dragon Oil’s prospective new owner has scuppered any prospect for future dividend payments, effectively upping the ante in the war of words over the ownership of the company.

The Emirates National Oil Company already owns 54% of Dubai-based/ Irish-listed Dragon and is offering 750p (1,073c) per share to buy out the remaining 46%.

The value of the €5.1bn deal has already been opposed by Dragon’s leading minority shareholders, Scottish investment firm Baillie Gifford and Dublin-based Setanta Asset Management on the grounds of it apparently undervaluing Dragon.

However, it has been backed by at least three other funds invested in Dragon, and Emirates Oil effectively only needs another 23% shareholder approval by July 30 to be able to delist Dragon. Yesterday, Emirates Oil said whether or not Dragon is delisted, it “no longer sees the need to maintain a dividend profile”.

It also said it sees operating challenges to Dragon sustaining its production forecasts of 100,000 barrels of oil per day; saying a 90,000 barrel target is more realistic.

“Mitigating these operating issues will likely require additional investments,” said Emirates Oil CEO Saif Al-Falasi said. “That’s why I don’t see a need for Dragon Oil to maintain a dividend profile in the near-term. These are difficult decisions for any publicly listed company and we see this as another reason for delisting Dragon Oil.”

Goodbody Stockbrokers’ analyst Gerry Hennigan said the ‘no dividend’ line could be seen as “a thinly veiled threat” to those shareholders calling for a higher bid, but an interim dividend now could provide an olive branch to any “impending impasse”.