Save Dragon Oil

Dragon Oil have just released this RNS saying they will be shortly distributing the proxy forms for voting. I urge everyone to vote NO to this appalling offer – the vote will be close so make sure you do it!

Not for release, publication or distribution (in whole or in part) in, into or from any Restricted Jurisdiction

Recommended acquisition for cash by

Emirates National Oil Company Limited (ENOC) LLC

the ordinary shares that it does not already own in

Dragon Oil plc

to be effected by way of a Scheme of Arrangement

under section 201 of the Companies Act 1963

Posting of Scheme Document

On 2 November 2009 the Independent Committee of Dragon Oil plc (”Dragon Oil”) and the Board of Emirates National Oil Company Limited (ENOC) LLC (”ENOC”) announced that they had reached agreement on the terms of the recommended acquisition for cash of the entire issued and to be issued share capital of Dragon Oil not already owned by ENOC (the “Acquisition”). The Acquisition will be effected by way of a scheme of arrangement under Section 201 of the Companies Act 1963 of Ireland (the “Scheme”).

Since the approach by ENOC, the Independent Committee, together with its financial advisers, has sought to achieve the best outcome for minority shareholders. A priority of the Independent Committee has been to ensure that due process is followed at all times and that the integrity of this process is beyond reproach.

In its assessment of the Offer Price, the Independent Committee, together with its financial advisers, have undertaken significant valuation work on the assets and prospects of Dragon Oil.

Dragon Oil is a single asset company and has made significant progress in developing the Cheleken contract area in the Caspian Sea, offshore Turkmenistan. There are specific geopolitical, operational, and technical risks associated with the contract area and the region which have a significant bearing on the underlying valuation of the asset.

The Independent Committee, who has been so advised by Davy Corporate Finance and HSBC, believes that the terms of the Acquisition to be fair and reasonable for the minority shareholders of Dragon Oil. In providing their advice, Davy Corporate Finance and HSBC have taken into account the commercial assessments of the Independent Committee.

The cash offer of 455 pence per Dragon Oil share will provide the minority shareholders of Dragon Oil the opportunity to realise a cash exit at a significant premium of 34.6 per cent. to the Closing Price of 338 pence per Dragon Oil Share on 3 June 2009, the last Trading Day prior to the announcement by Dragon Oil that it had received an approach in relation to a possible offer.

In arriving at their decision to recommend the Acquisition, the Independent Committee has also taken into account ENOC’s majority controlling shareholding in Dragon Oil, as well as a written irrevocable undertaking from ENOC not to sell or accept any offer for its Dragon Oil shares for a 12 month period commencing on 10 August 2009. As a consequence, the Independent Committee has been unable to engage with other parties because no alternative offer would be capable of completion.

Dragon Oil has today posted a circular to Dragon Oil Shareholders (and for information only, to holders of options over Dragon Oil Shares) (the “Scheme Document”) containing, inter alia, the terms of the Acquisition and the Scheme, an explanatory statement pursuant to Section 202 of the Companies Act 1963 of Ireland, notices of the required meetings, a timetable of principal events and details of the action to be taken by Dragon Oil Shareholders.

To become effective, the Scheme requires the approval of Scheme Shareholders at a court meeting (the “Court Meeting”) and of Dragon Oil Shareholders at an extraordinary general meeting (the “EGM”). The meetings will be held at The Grosvenor House Hotel, 90 Park Lane, London W1K 7TN, United Kingdom on 11 December 2009. The Court Meeting will commence at 10:00 am, and the EGM will commence at 10:15 am (or as soon thereafter as the Court Meeting shall have concluded or been adjourned).

Shareholders may cast votes in respect of the Resolutions to be proposed at the Court Meeting and the EGM in any of the following ways, in accordance with the procedures set out in the Scheme Document:

# BY WAY OF THE FORMS OF PROXY, WHICH ACCOMPANY THE SCHEME DOCUMENT, BY POST OR IN PERSON;

# BY APPOINTMENT OF PROXIES VIA THE INTERNET; OR

# IN THE CASE OF CREST MEMBERS, BY APPOINTMENT OF PROXIES THROUGH THE CREST ELECTRONIC PROXY APPOINTMENT SERVICE.

Forms of Proxy for the Court Meeting and the EGM (which accompany the Scheme Document) should be returned by post to Capita Registrars at PO Box 7117, Dublin 2, Ireland, or delivered by hand (during normal business hours only) to Capita Registrars, Unit 5, Manor Street Business Park, Manor Street, Dublin 7, Ireland, no later than 48 hours prior to the commencement of each meeting. The completion and return of a Form of Proxy for any of the meetings will not prevent Dragon Oil Shareholders from attending and voting at the Court Meeting or EGM in person if they wish to do so.

It is important that, for the Court Meeting, as many votes as possible are cast (whether in person or by proxy) so that the High Court may be satisfied that there is a fair and reasonable representation of Dragon Oil Shareholder opinion. Dragon Oil Shareholders are therefore strongly urged to complete, sign and return their Forms of Proxy as soon as possible.

The Scheme Document will be available on Dragon Oil’s website at www.dragonoil.com.

Capitalised terms used, but not defined, in this announcement have the same meaning as in the Scheme Document.

Enquiries: Dragon Oil
Financial Advisers to Dragon Oil Davy Tel+353 1 679 6363

Corporate FinanceHugh McCutcheonJohn Frain
HSBC Bank plcPhilip WolfeAbbas Merali Tel+44 207 992 2216+44 207 992

2279

The directors of Dragon Oil accept responsibility for the information contained in this document, other than the recommendation and associated opinions of the Independent Directors. To the best of the knowledge and belief of the directors of Dragon Oil (who have taken all reasonable care to ensure that such is the case), the information contained in this document for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.

The Independent Directors accept responsibility for the recommendation of the Acquisition and associated opinions contained in this document. To the best of the knowledge and belief of the Independent Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.

Davy Corporate Finance, which is regulated by the Financial Regulator, is acting exclusively for the Independent Committee of Dragon Oil and no one else in connection with the Acquisition and will not be responsible to anyone other than the Independent Committee of Dragon Oil for providing the protections afforded to clients of Davy Corporate Finance or for providing advice in relation to the Acquisition, the contents of this Announcement or any transaction or arrangement referred to herein.

HSBC, which is authorised and regulated by the Financial Services Authority, is acting exclusively for the Independent Committee of Dragon Oil and no one else in connection with the Acquisition and will not be responsible to anyone other than the Independent Committee of Dragon Oil for providing the protections afforded to clients of HSBC or for providing advice in relation to the Acquisition, the contents of this Announcement or any transaction or arrangement referred to herein

Any person, who has an interest of one per cent. or more of Dragon Oil Shares may have disclosure obligations under Rule 8.3 of the Irish Takeover Rules, effective from the date of the commencement of the Offer Period.

This information is provided by RNS The company news service from the London Stock Exchange

Noster issues Dragon Oil statement (original source)

Noster Capital, the London-based hedge fund manager which labeled the ENOC offer for Dragon Oil as too low, has released a statement inviting the Independent Committee on the deal for discussions on the firm’s future prospects.

Below is the statement in full.

Noster Capital welcomes the statement put out by ENOC regarding its offer on Dragon Oil Plc.

It is encouraging to see that ENOC remains a committed long term shareholder to Dragon Oil Plc (DGO) should the undervalued offer that is on the table not be accepted by the minorities.

During the past five months, the Independent Committee has not replied to repeated requests from Noster Capital to engage in a discussion regarding our view of the intrinsic value of DGO’s assets. We continue to believe that it would be in the best interests of all stakeholders for the Independent Committee to acknowledge requests by significant minority shareholders to discuss detailed analyses of the underlying fundamentals of the Company.

Noster Capital understands that the financing to the deal might not be able to be increased and that as a result ENOC may have difficulties in raising the offer to a level that would start reflecting the intrinsic value of DGO. If that is the case, we welcome the long term commitment that was made by ENOC in this announcement and look forward to enjoy the future success of DGO as a public company, where all of us together, will benefit from the extremely strong fundamentals that we believe are in place for the oil & gas sector and for DGO in particular.

We would like to publicly encourage the Independent Committee to run an auction, and to openly share all the information with the market, where every interested party would be invited to submit a bid for the minorities of DGO. In this way, every investor would be certain that the committee tried to maximise the value for all minorities, to whom they have a primary fiduciary duty. Noster Capital LLP is the investment manager for Noster Capital Master Fund, a Global Value Investing fund which invests for the medium to long term in public equities of companies who are selling at deep discounts
to their intrinsic value.

RNS Number : 6030C Dragon Oil PLC 17 November 2009

17 November 2009

Not for release, publication or distribution (in whole or in part) in, into or from any Restricted Jurisdiction

Dragon Oil plc

no increase statement from enoc

Further to the announcement on 2 November 2009 regarding the recommended acquisition for cash of the entire issued and to be issued share capital of Dragon Oil plc (”Dragon Oil”) not already owned by the Emirates National Oil Company Limited LLC (”ENOC”) (the “Acquisition”), the Board of ENOC has confirmed to the Independent Committee of Dragon Oil that the price of 455 pence per Dragon Oil Share is final and will not be increased and that, whether or not the Acquisition is successful, ENOC remains a committed long-term majority shareholder in Dragon Oil.

In the same joint announcement by the Independent Committee of Dragon Oil and the Board of ENOC on 2 November 2009, the Independent Committee (having been so advised by Davy Corporate Finance and HSBC) stated that the terms of the proposed Acquisition by ENOC are fair and reasonable for the minority shareholders of Dragon Oil.

The Independent Committee reiterates that the cash offer of 455 pence per Dragon Oil Share will provide the minority shareholders of Dragon Oil with the opportunity to realise a cash exit at a significant premium of 34.6 per cent. to the Closing Price of 338 pence per Dragon Oil Share on 3 June 2009, the last Trading Day prior to the announcement by Dragon Oil that it had received an approach in relation to a possible offer, and reiterates that the terms of the proposed acquisition are fair and reasonable for the minority shareholders of Dragon Oil.

The Independent Committee confirms that it continues to recommend unanimously that Dragon Oil Shareholders vote in favour of the Acquisition.

It is envisaged that the Scheme Document, containing further details of the Acquisition, will be issued to Dragon Oil shareholders later this week.

PRESS ENQUIRIES: Dragon Oil
Financial Advisers to Dragon Oil Tel
Davy Corporate Finance +353 1 679 6363

Hugh McCutcheon John Frain
HSBC Bank plc Tel
Philip Wolfe +44 207 992 2216
Abbas Merali +44 207 992 2279
PR Adviser to Dragon Oil Tel
Citigate +44 207 638 9571

Martin Jackson Emma Woollaston

By Tom Bergin

LONDON, Nov 16 (Reuters) – Another shareholder in explorer Dragon Oil said it would reject a takeover bid from controlling shareholder Emirates National Oil Company (ENOC), that values Dragon at $3.9 billion.
Paris-based Carmignac Gestion said the bid undervalued Dragon’s assets and prospects for growth, boosting the chances that ENOC will not succeed with its bid and may be forced to offer more cash.
“It will be tight,” one source close to the process said.
Portfolio Manager Xavier Hovasse said in an email that funds under his firm’s management owned 4.3 million shares, or 0.83 percent of Dragon’s issued shares.
Dragon shares traded down 0.6 percent at 429 pence at 1512 GMT, lagging a 1.9 percent gain in the DJ Stoxx European oil and gas sector index.
Dubai state-controlled ENOC said its bid was conditional on acceptance from 75 percent of the minority shareholders, which means investors representing around 12 percent of the total share capital could block the deal.
After Dragon’s largest minority investor Baillie Gifford & Co, whose funds own 4.2 percent of Dragon, said last week it would reject the bid, Keith Morris at Evolution Securities said there was a real and growing risk the bid would fail.
Peter Hutton, oil analyst at NCB, said in a research note last week that ENOC has allowed itself the option to increase its original bid of 455 pence/share but added it may be unable to borrow enough money to do so.
ENOC plans to finance the $1.9 billion acquisition with debt from Standard Chartered and Dubai-state controlled bank Emriates NBD.
However, as soon as it consolidates Dragon Oil, it would be able to use the $900 million on Dragon’s balance sheet to repay a chunk of the debt.
Soon after, it could borrow against Dragon’s fields to repay much or all of the remaining debt, market sources said, with the result that ENOC has to contribute little or no cash from its own balance sheet.
One hedge fund manager, who owns Dragon stock, said ENOC could afford to pay up to 6 pounds/share without having to contribute any cash to the deal, although he doubted it would be prepared to pay this much.
ENOC declined to comment while a Dragon spokesman said the committee of independent directors still recommended the bid, which they thought was fair.
ENOC could, possibly, gain outright control without upping its offer if it amended the offer to a form whereby it proceeds with the takeover if it receives 75 percent of Dragon’s total issued share capital.
It could then delist the company, which would force some institutional investors, which are only allowed to own listed shares, to sell out, thus allowing ENOC to reach the threshold at which it could squeeze out minority shareholders.
ENOC already owns 52 percent of Dragon.
Hutton sees such a move as legally possible but unlikely.
“It would be damaging to Dubai’s reputation at a time when the Emirate is trying to establish itself as an international financial centre, and when Dubai is seeking international funding. We would not expect the advisers of either ENOC or Dragon to support such a tactic” he said.

(Additional reporting by Quentin Webb; Editing by Mike Nesbit and Simon Jessop) Keywords: DRAGONOIL/ (Reporting by Tom Bergin, +44 207 542 1029, tom.bergin@reuters.com, Reuters Messaging tom.bergin.reuters.com@reuters.net)

UPDATE 1-Another Dragon Oil investor rejects ENOC bid

Mon Nov 16, 2009 10:55am GMT

* Fund manager controls 0.83 percent of Dragon’s shares

* Analysts see increasing risk of bid scuppered

* Dragon Oil shares in London down 0.5 percent

(Adds detail, background, analysts and share price)

By Tom Bergin

LONDON, Nov 16 (Reuters) – Another shareholder in explorer Dragon Oil (DGO.L) said it would reject a takeover bid from controlling shareholder Emirates National Oil Company (ENOC), that values Dragon at $3.9 billion. Paris-based Carmignac Gestion said the bid undervalued Dragon’s assets and prospects for growth.

Portfolio Manager Xavier Hovasse said in an email that funds under his firm’s management owned 4.3 million shares, or 0.83 percent of Dragon’s issued shares.

Dragon shares traded down 0.5 percent at 430 pence at 1051 GMT, lagging a 1 percent gain in the DJ Stoxx European oil and gas sector index .SXEP.

ENOC said its bid was conditional on acceptance from 75 percent of the minority shareholders, which means investors representing just 12 percent of the total share capital could block the deal.

After Dragon’s largest minority investor Baillie Gifford & Co, whose funds own 4.2 percent of Dragon, said last week it would reject the bid, Keith Morris at Evolution Securities said there was a real and growing risk this happens. [ID:nLB174102]

Peter Hutton, oil analyst at NCB, said in a research note last week that ENOC has allowed itself the option to increase its original bid of 455 pence/share but added it may be unable to borrow enough money to do so.

One hedge fund broker said Dragon could amend its offer so that it can proceed with the takeover and delist the company if it receives 75 percent of the total issued share capital.

ENOC already owns 52 percent of Dragon.

Hutton sees such a move as legally possible but unlikely.

“It would be damaging to Dubai’s reputation at a time when the Emirate is trying to establish itself as an international financial centre, and when Dubai is seeking international funding. We would not expect the advisers of either ENOC or Dragon to support such a tactic” he said. (Editing by Mike Nesbit)

http://uk.reuters.com/article/idUKLG37166720091116?pageNumber=2&virtualBrandChannel=0&sp=true

From Dragon Oil investor relations:

The Scheme document will be posted within 28 days following the announcement on 2 November 2009. You are likely to receive the document within the next 16 days. The date and location for the Court meeting have not been set yet. The information will be provided within the scheme document.

Kind regards,

Anna Gavrilova
Investor Relations
Dragon Oil plc
St Andrew’s Building
17 Old Park Lane
London W1K 1QT UK

Wealth Management Daily

Dragon Oil GBp 429 Indications of Rejection for Bid – What Happens Next?
The facts:

With Baillie Gifford’s public notice of rejection of ENOC’s bid being followed by a similar from smaller Noster Capital, Dragon’s share price fell 2.3% yesterday and the market begins to suggest that the deal may be unlikely to be accepted. We review what options there are for ENOC and shareholders.
Our analysis:

We regard the fall in Dragon as positive. Although there is likely to be some further dip as holders such as special situations funds exit the stock and shorter-term holders take profits, we argue that a correction will be relatively minor in the context of the higher value now recognised by independent shareholders.

ENOC has allowed itself the option to increase its original bid of 455p: it chose not to state in the original announcement that this was a final bid (as can be standard practice) and Dragon’s advisors HSBC told the FT that the bid had reached “a range which is recommendable” (our underlining). We note that the level of 455p leaves a10% step to 500p which might been a more credible original target. However we see two obstacles for an increased bid:
1) the wording of Baillie Gifford’s statement, that the offer “materially understates the fundamental and strategic value of the Company” suggests to us that it recognises an upside beyond a bit of sugar on top of the original bid. Even the 20% definition that Dragon have used for material (in the context of what constitutes a “material move” in the share price which would have triggered an update on the status of negotiations) might not suffice.
2) ENOC took five months to get to 455p and we think the Independent Committee probably got about as much from ENOC as they could afford given their borrowing requirements from Standard Chartered and National Bank of Dubai. We believe ENOC may find it difficult to finance the level which would gain sufficient shareholder acceptance.

Some commentators have raised the prospect of ENOC replacing the offer under the Scheme of Arrangement to a straight offer, which would on paper circumvent the ability of 12.2% of the shareholders from blocking the bid. It is argued that if ENOC could then buy 23.6% on the open market, it would reach >75% required to change articles of association etc and effective impose change on resisting shareholders. While this avenue would be legally available for ENOC, it would be damaging to Dubai’s reputation at a time when the emirate is trying to establish itself as an international financial centre, and when Dubai is seeking international funding. We would not expect the advisers of either ENOC or Dragon to support such a tactic, for which we can see no precedent in DGO’s primary market.

The risk for ENOC therefore is that a failed bid leaves it effectively with “stranded assets” of 51.5% of the company, or in practice more than this buy still insufficient to either secure full control or more imminently access the full $1bn of cash on Dragon’s assets, which we believe is critical to their funding requirements. In these circumstances, ENOC may be forced to look again at its original holding and come to the conclusion that the best option for cash creation is indeed to consider selling its stake, for which we believe there would be considerable interest. While ENOC has undertaken not to sell its stake until August 2010, we understand that this agreement may be contingent on
acceptance of the deal and could lapse if it falls through. If not, we see nine months as little of an obstacle given the five months it took them to get this far.

Conclusion & Action:
We expect DGO to see some near term pressure, but this is a positive catalyst, indicating the market is recognising the deal will fail. We expect good support from funds looking for an opportunity to buy on correction.

Peter Hutton

Dragon Oil minority holder shuns ENOC bid (original source)

LONDON – The largest minority shareholder in Dublin-listed Dragon Oil has rejected a takeover offer from Dubai-based Emirates National Oil Company, saying it materially undervalues the Turkmenistan oil producer, according to a statement published on its website Tuesday.

“Over the past decade, the company has delivered very strong oil production growth which we believe should be sustained for a number of years to come,” said the statement from investment management firm Baillie Gifford.

“We would encourage management to continue its successful growth strategy and progress its proposed restructuring and application for primary listing on the London Stock Exchange.”

Dragon Oil’s board has recommended the offer. “The committee remains happy with the valuation put forward,” by ENOC’s offer, said a Dragon Oil spokesman. ENOC declined to comment.

ENOC already owns 51.5% of Dragon Oil and is offering 455 pence a share in cash for the remaining shares. The offer represents a 35% premium to the share price the day before the bid and values the whole company at $2.357 billion.

NCB Stockbrokers analyst Peter Hutton said Baillie Gifford’s rejection is significant because three-quarters of minority of shareholders must approve ENOC’s offer. “Baillie Gifford hold 4.2% of Dragon – one third of the votes necessary to block the approval,” he said.

“This will provide a significant catalyst around which other holders may choose to group. I have not yet spoken to any holder who has indicated that they are minded to accept the 455p,” he added.

If ENOC’s offer is rejected, it may struggle to come up with a much higher price, said Hutton. “They’ve been dragged kicking and screaming to 455p and financing is an issue,” following this year’s $10 billion bailout of indebted Dubai by its fellow emirate Abu Dhabi, he said.

Dragon Oil’s principal asset is the Cheleken contract area, in Turkmenistan’s Caspian Sea section. The contract area, operated and 100% owned by the company, contained proven and probable reserves of 645 million barrels of oil and contingent gas resources of 3.2 trillion cubic feet, as of June 2008.

Official Press Release

10 November 2009
For journalist use only
Emirates National Oil Company Limited (ENOC) LLC
Offer for Dragon Oil plc (“the Company”)
Baillie Gifford & Co notes the Offer dated 2nd November 2009 made by Emirates National Oil Company Limited (ENOC) LLC for Dragon Oil plc (“the Company”). In its opinion, the Offer materially understates the fundamental and strategic value of the Company.
Over the past decade, the Company has delivered very strong oil production growth which we believe should be sustained for a number of years to come. We would encourage management to continue its successful growth strategy and progress its proposed restructuring and application for primary listing on the London Stock Exchange, as announced by the Company on 27th March 2009.
This would, we believe, raise the Company’s profile amongst global institutional investors and facilitate enhanced access to capital markets for future growth opportunities.
Richard Sneller, Head of Emerging Markets Equities at Baillie Gifford & Co, said: “We plan to reject the Offer on behalf of our clients, whose holdings under our management currently amount to 4.2% of the issued share capital of the Company, by voting against the scheme of arrangement and matters related to it.”
Baillie Gifford & Co would like to extend their appreciation to the Independent Committee and its Advisors for their hard work.
Baillie Gifford & Co is an independent asset management firm based in Edinburgh. It manages £53 billion for its clients as at end September 2009.

If you hold a nominee account it is imperative that you immediately get in touch with your broker and demand that they allow you to vote. Most nominee accounts do not by default allow you to vote and you will need to get your account status changed before you will be able to do so.