Dragon Oil, the explorer majority-owned by Emirates National Oil Company (Enoc), is considering the purchase of a West African producer as it seeks to diversify beyond the Caspian.
The company, which pumps nearly all of its oil in Turkmenistan, announced on Friday that it was weighing an acquisition of BowLeven, which operates in the West African countries Gabon and Cameroon.
"Dragon Oil notes the recent movement in BowLeven's share price and confirms that it is in the preliminary stages of exploring a possible offer for all of the issued and to be issued share capital of BowLeven," it wrote on Friday. Shares of Dragon, which is listed in London and Dublin, were up 3 pence after the announcement, reaching 547 pence by the close of trading on Friday.
Dragon, which is 51 per cent owned by the Dubai Government's Enoc, has been looking for places to invest a cash pile of US$1.5 billion (Dh5.5bn) since last year.
The company is evaluating opportunities in West Africa as well as north-east Africa and Central Asia, said Emad Buhulaigah, the company's general manager of petroleum development.
"We have to worry about our investors' money," he said yesterday. "We don't throw it anywhere. We have to do our due diligence before we decide." Dragon's decision has implications for the UAE. Last year, Enoc, which operates petrol stations across Dubai and the Northern Emirates but must import oil from abroad, stopped supplying fuel to stations outside Dubai.
The high price of oil coupled with federal caps that keep petrol prices artificially lowleft the company facing a Dh4.2bn fuel bill, according to Enoc.
Although some stations in Sharjah have resumed supplying motorists, Enoc is still waiting on a decision from the Government on the price caps.
BowLeven, which had a discovery in Cameroon in October, needs at least $400m to pump oil by 2015, according to Kevin Hart, its chief executive.
The company's shares have declined from a July high of 342.25 pence to 120 pence on the London exchange.
The African explorer is "undervalued by the current market price" and Dragon would be "well-positioned" to buy it, said Laura Loppacher, an analyst at Jefferies. Dragon must decide on its intentions towards the African company by March 16 to comply with UK takeover regulations.
If it does not pursue BowLeven, the Cameroon producers Kosmos and Perenco could take Dragon's place as bidders, Ms Loppacher said.
Production in both Gabon and Cameroon is declining. In Cameroon, output has fallen from 180,000 barrels per day (bpd) in the 1980s to recent levels of about 60,000 bpd.
In Gabon, where oil revenue accounts for 46 per cent of the government's budget, analysts predict that oil could run out by 2025.
Analysts say Dragon is willing to invest in assets in riskier environments.
In October, the company, which also drills in Yemen, agreed to invest up to $26.6m to develop an offshore field in Tunisia.
In the joint venture, with the Australian producers Cooper Energy and Jacka Resources, Dragon would pay 75 per cent of drilling costs in exchange for the right to take over production if the partners strike oil.
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Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Vidaamuyarchi
Director: Magizh Thirumeni
Stars: Ajith Kumar, Arjun Sarja, Trisha Krishnan, Regina Cassandra
Rating: 4/5
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Engine: Direct injection 4-cylinder 1.4-litre
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Directors: Avinash Arun, Prosit Roy
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Director: Kangana Ranaut
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Ruwais timeline
1971 Abu Dhabi National Oil Company established
1980 Ruwais Housing Complex built, located 10 kilometres away from industrial plants
1982 120,000 bpd capacity Ruwais refinery complex officially inaugurated by the founder of the UAE Sheikh Zayed
1984 Second phase of Ruwais Housing Complex built. Today the 7,000-unit complex houses some 24,000 people.
1985 The refinery is expanded with the commissioning of a 27,000 b/d hydro cracker complex
2009 Plans announced to build $1.2 billion fertilizer plant in Ruwais, producing urea
2010 Adnoc awards $10bn contracts for expansion of Ruwais refinery, to double capacity from 415,000 bpd
2014 Ruwais 261-outlet shopping mall opens
2014 Production starts at newly expanded Ruwais refinery, providing jet fuel and diesel and allowing the UAE to be self-sufficient for petrol supplies
2014 Etihad Rail begins transportation of sulphur from Shah and Habshan to Ruwais for export
2017 Aldar Academies to operate Adnoc’s schools including in Ruwais from September. Eight schools operate in total within the housing complex.
2018 Adnoc announces plans to invest $3.1 billion on upgrading its Ruwais refinery
2018 NMC Healthcare selected to manage operations of Ruwais Hospital
2018 Adnoc announces new downstream strategy at event in Abu Dhabi on May 13
Source: The National
COMPANY PROFILE
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