http://www.ncbresearch.com/daily/NCBLatestIrishEquities.pdf (original source)

• The bid for Dragon Oil by Dubai’s ENOC was soundly defeated, achieving only 49% of
the votes by holdings rather than the 75% required. Votes in favour of the bid
accounted for just 28% of the free float. This implies a relatively small overhang (13.6%
of the total holding) of arbitrageurs and weak holders, which we expect to be quickly
flushed out. The stock fell from 388p to 360p immediately after the announcement and
recovered to 379.75 by the close.
• We believe the Dragon Oil can regard this as a vote of confidence in management and
the company as a standalone entity, its plans and long term potential. They can now
concentrate on continuing to demonstrate operational performance and delivery, and
finalising the commercialisation of the gas reserves. With four rigs operational, they
should be on track in their drilling programme for 2009-2010, with production growth
accelerating next year.
• With the opening of the connection of the export pipe to China (see below) and
expected restart of gas sales by Turkmenistan to Gazprom, we think the background for
commercialisation of gas is now stronger than it has been for most of this year, and we
expect to see progress comfortably in advance of the completion of gas separation
scheduled for the end of next year. We note that last week, Shenzen Gas announced
that it is paying CNPC $11.40/mmbtu for gas from Central Asia, as CNPC expands its
supplies.
• Beyond the operational momentum of Dragon itself, the position of ENOC in the wake
of the failed bid also raises questions which could have positive implications for
shareholders. We believe the access to Dragon’s cash which was a key driver of the
bid for ENOC means that they may wish to consider a special dividend, for which we
would see greater shareholder support. We would however watch for any indication that
ENOC press for any farmout of Dragon’s 100% stake to realise additional cash, but
note that with access to just over half the receipts this option is less attractive to ENOC,
who will also want to maximise their upstream hedge.
• The bigger question remains over whether ENOC will contemplate (or be able to resist)
selling down its stake, which without the blocking stake will have significantly greater
value. We have regularly pointed out the strategic attraction of the area to industry
players, and the pace of declarations of interest in the region (both explicit and implicit)
has accelerated during the timetable of the bid. Over the last three weeks, the
President of Turkmenistan has had meetings with the presidents of Italy, Russia and
China, with the latter in the country this weekend to open the pipeline to Xingjiang and
into the West-East pipeline. Turkmen gas sales are expected to start at 5bcma next
year then ramp up once the eastern section of the second West-East pipeline is
completed in 2011 (CNPC has signed a deal for 30bcma with an option to increase to
40bcma).
• We congratulate the shareholders for rejecting the offer from ENOC despite some
pressure and short term downside risk (which we estimated down to 370-380p). We
have confidence in the management of Dragon and expect them to renew focus on
operational momentum and building on the faith shown by their major shareholders,
which will drive underlying value. Over and above that, we do not rule out further
corporate interest for Dragon despite the stated commitment by ENOC to hold to end
2011 – we are sure that Dubai’s luxury resort Atlantis did not expect to offer flights from
UK and three nights at $699 when it did its business plan, but times change.
Peter Hutton, +44 20 7071 5227 peter.hutton@ncb.ie

I just got back from the pub and it turns out that we won! The ENOC takeover has been defeated! It turns out that the vote was defeated by # of shares rather than # of votes so this shows that BG and probably JPM must have voted AGAINST the takeover. Many thanks to them and everyone who took part in the mailing/calling campaigns!

The meeting is now over. The results will be announced via RNS

Voting is now over.. I think it may still be possible to submit votes using the capita registrars website however I am not sure if they will be counted. The votes will be recorded tonight at 6:00pm. The only way to vote now is to attend the meeting on Friday and vote in person. There has been a request to have the meeting recorded so if anyone attending has a dictaphone or video recorder please bring it along so that others who were not able to attend can see/hear what happened.

Whatever the outcome of the meeting, I will be going to the pub afterwards and I invite everyone to come along.

This is a note from Goodbody stockbrokers who are advising ENOC in their attempted Dragon-napping. This is an old note, but it shows that earlier this year they saw Core NAV rising from 478.6p to 494.1p, while Total NAV increases from 581.6p to 597.0p.. Funny they now seem to think it’d be okay to offer us just 455p. Vote AGAINST!

Goodbody Stockbrokers Morning Wrap 7/12/2009 and 27/10/2009
Dragon Oil: Steady Progress
Recommendation: Buy
Closiing price 407p

“While the investment case surrounding Dragon continues to be overshadowed by the lack of clarity regarding ENOC’s intentions, at an operating level events continue to demonstrate progress.
Of note within the statement is the fact that capex ($56m in Q3)
continues to undershoot, while production (46.1 kbopd v our Q3 estimate of 44.0 kbopd) overshoots. With production trending ahead, and expectations of a four-rig complement early next year, confidence in our FY10 projection of 52.0 kbopd is reinforced.
Post the IMS, adjustments to our 2009 and 2010 earnings projections are at the margin (+2% in both years), with the increase in FY09 gross production (from 44.4 to 45.1 kbopd) and realised price (from $64.4 to $69.0 per barrel counteracted to a large extent by a lower forecast percentage entitlement.
That said, forecast net cash at the end of 2009 and 2010 increases by 12% and 15% respectively as we have shaved $50m in each year from our prior capex estimates due to the slower pace of infrastructure spend. With net cash at the end of September of $962m, we now expect Dragon to exit the year with c.$1bn in net cash (equivalent to 29% of the current market cap.) That has positive implications for our NAV with Core NAV rising from 478.6p to 494.1p, while Total NAV increases from 581.6p to 597.0p. The pending arrival of additional rigs and a rising oil price continue to provide confidence in production growth. Combine that growth potential with the obvious value (EV/BOE of $3.85, compared to typical take-out multiples in th range of $10 – $12 per boe) and we see no reason to alter our positive stance.
Our price target, which remains pegged to Core NAV(i.e. OIL PRODUCTION ONLY), nudges up from 470p to 495p. The signing of a gas sales agreement, which we anticipate at some stage in 2010, however, would highlight the value within its gas resource (3.2 TCF) and suggest a price target more in line with Total NAV. As such, we view our current target as consevative given progress in terms of oil production and the latent value within its gas resource and maintain our BUY recommendation.”

The board of Dragon, a company with substantial oil interests in Turkmenistan, recommended a 455p-a-share takeover by Enoc, the national oil company of Dubai, which owns 52 per cent of its shares. A meeting to vote on the takeover takes place on Friday.

Initially, the shares jumped to within 3 per cent of the offer price. However, they are now trading at just over 400p, after Baillie Gifford, Dragon’s second largest shareholder, said it was voting against the deal last month.

Because of the structure of the deal, Enoc is unable to vote. To succeed, the scheme of arrangement needs three-quarters of those voting to support it, meaning opponents need, at most, 12 per cent of Dragon’s shares to block it.

About 10 per cent of Dragon is owned by retail investors, who are less likely to vote, meaning a No vote by 10 per cent of its shares might scupper a deal.

Baillie Gifford has kept buying Dragon – 500,000 shares bought on Thursday took its stake to 4.63 per cent. Carmignac Gestion, with 0.83 per cent of Dragon, also plans to vote against the proposal.

In a sign that Dragon Oil’s management may be starting to panic that their attempt to takeover this company is failing they re-published an old propaganda piece by RiskMetrics (almost certainly bought and payed for by Dragon Oil management) as an RNS.. This of course was picked up by various press-release rehashing news outfits. Don’t be fooled by their PR. I take this as a good sign, but please make sure you remember to register your AGAINST votes! We haven’t won yet.

Update: It turns out that RiskMetrics, like Georgeson’s (the company ENOC hired to telemarket their offer to small shareholders) offer proxy vote manipulation services such as Vote recommendations. Hah!

This is directed at holders of Certificated shares, rather than shares held in Nominee accounts.

If you have arrived at this site looking for information on the proposed takeover (and as we would say, “daylight robbery”) of Dragon Oil by ENOC, then well done. You may have been contacted by one of the SaveDragon people, by phone or letter, or you may simply have Googled “Dragon Oil takeover”,  having received your document and voting papers from Dragon Oil.

Here on this website we are devoting our efforts to stop the takeover. The reasons are laid out in various articles throughout the website. So, how can we best achieve that? Well, the shareholders have a vote, and it is crucial that as many of us use that vote to block the takeover.

Now, you may be a shareholder with perhaps a hundred shares, and might be thinking, “But will my few shares make a difference? What’s the point?”.  Well, the point is that this particular type of vote depends, not only on the number of shares that are voted, but also on the NUMBER OF SHAREHOLDERS voting. So your one hundred shares will count towards the total, but you, as holder of certificated shares could make a huge difference to the outcome. We need over half (50%) of the shareholders WHO VOTE, to VOTE NO, in order to defeat this proposal. If that doesn’t work, then we need over 25% of the shares voted to vote NO to stop it.

So, your vote really does count, as do the votes of friends and family, no matter how few shares you or they own. So please inform anyone you know who has Dragon Oil shares, to exercise their right to vote, and vote NO to this scandalous attempt to take our shares for a pittance.

Fired-up Baillie Gifford may snuff out £2bn bid for Dragon Oil (original source)

Published Date: 27 November 2009
By Hamish Rutherford
City Correspondent
BAILLIE Gifford may have scuppered a £2 billion takeover of an Irish oil company after a rare show of shareholder activism.
The Edinburgh-based firm, which manages more than £50bn in assets, opted to vote against the takeover of Dragon Oil, its first intervention of this sort for more than a decade.

Enoc, the national oil company of the United Arab Emirates, is offeri
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ng 455p a share for the 48 per cent of Dragon it does not already own, an offer agreed by Dragon’s board. The deal values Dragon, which is listed on the Dublin stock exchange, at £2.36bn.

Despite a protest movement – savedragon.com – quickly emerging, the shares, which also trade in London, quickly rose above 440p on expectations of a speedy takeover. But since Baillie Gifford, the next largest shareholder, said its stake – about 4.3 per cent – would be used against it, shares have been dropping on fear the deal may fall through. The group says long-term shareholders appear united against the deal.

While shareholders occasionally make their plans known on contentious votes, Baillie Gifford rarely does. It has not publicly intervened in this way since voting – unsuccessfully – against the hostile takeover of Argos by Great Universal Stores in 1998.

Richard Sneller, Baillie’s head of emerging markets equities, told The Scotsman that the move was not part of a deliberate move into activism. “You’d be correct to read that it reflects the strength of feeling in this case, rather than any great strategic policy change at Baillie Gifford,” he said.

Dragon Oil’s principal assets are in the Caspian Sea, off Turkmenistan, with production of nearly 43,000 barrels of oil a day. Baillie Gifford said it believes Dragon’s strong production growth will continue. Instead of a takeover, it argues, Dragon should switch its primary listing to London, which would give it exposure to a much wider pool of capital.

Sneller said he is not running a campaign against the deal, but has spoken to a number other shareholders since going public with his views. Long-term holders believed the offer was not “full and fair”, he said.

“People who are looking to hold on to this share with a long-term time horizon are unanimous. I’ve yet to meet anyone with a long-term horizon who doesn’t essentially say they agree and will vote against (the offer].

“People who do have shorter-time horizons have other factors at play, and we respect that.”

Hedge funds are thought to be nervous about the situation. Yesterday, shares traded below 400p for the first time since the offer was announced. Closing flat at 400p, they are 12 per cent below the offer price.

Spokesmen for Enoc and Dragon Oil maintained that the deal on the table was fair, representing the certainty of cash. Both declined to comment on the move by Baillie Gifford.

The decision of JP Morgan, which owns about 3 per cent of Dragon, will be crucial, but it is not commenting.

Details of Scheme of Arrangement, Strategic background
• Dragon published yesterday the details of the Scheme of Arrangement for the offer at
455p announced on 2 December. The critical step is the Court Meeting and EGM of
Dragon shareholders which are scheduled for 10.00 and 10.15 on December 11th
respectively, at the Grosvenor House Hotel in London. For more details of the Scheme,
please also refer to our note of 4th Nov “Slaying the Dragon ? Not for 455p !”
• ENOC needs to achieve 75% of the minority votes by weighting and 50% of the number
of votes cast. While the decision to hold the meeting in London rather than in Ireland
may appear to place an obstacle in the way of smaller Irish retail investors, voting may
be done by proxy up to 48 hours before the Court Meeting. We continue to believe that
the vote will be tight, as already indicated by the statements of rejection issued by some
of the major shareholders, and the failure of ENOC to respond by even a small increase
in the bid strongly confirms our position from the outset of the offer that the 455p
reflects what ENOC can afford to pay, not what the assets are worth.
• The statement repeats that ENOC has undertaken not to sell its shares in Dragon until
at least August 2009 (August 2010 -Ed). Originally highlighted as a positive signal that ENOC would not
flip the shares, the consequence of this agreement has been that the Independent
Committee has been unable to engage with other parties, effectively ruling out any
assessment of alternative value for shareholders. We understand that if the offer
lapses, this undertaking may also become void and ENOC could sell its stake at a
higher price. We believe this has significantly greater potential for shareholders.
• We note that the newsflow from Turkmenistan on the day of Dragon’s statement
yesterday continues to highlight the significant strategic attraction of assets in the
region, with the following items in the trade press:
o Oil and Gas Minister Oraznur Nurmyradov told a conference in Ashgabat that
Turkmenistan plans to boost natural gas output almost four fold to 250bcma
by 2030.
o Head of State hydrocarbons resouces agency told Reuters that Turkmenistan
is interested in working with “western partners” for investment in LNG plants
o US State Department has offered to help Turkmenistan and Azerbaijan
resolve territorial disputes in the Caspian, facilitating future energy projects,
including the Nabucco pipeline exporting gas from Caspian to Europe
o Reuters report that Chevron is in talks with Turkmen government about
participation in the giant South Iolotan gas field (which would be critical for
the 250bcma target above).
• ENOC portrays itself as the only game in town and therefore hopes to capture the
Turkmen assets at a considerable discount. We maintain that ENOC is far from the
only option for shareholders to realise value, either through the strength of
independent cashflows or exploiting the considerable interest in accessing the region,
as just the news items from yesterday continue to highlight. We continue to
recommend that shareholders reject the offer from ENOC and vote against it on or
ahead of the 11 December.
Peter Hutton +44 207 071-5227 peter.hutton@ncb.ie