Dragon Oil seeks dividend cut as output rises

Dragon Oil, an oil explorer part-owned by Dubai, said output was up 23 per cent in the first quarter of the year. The company also said that it would seek approval at its annual general meeting on Monday for a cut in the final dividend payment for shareholders for last year to 16 cents. The company gave out 18 cents the year before.

Average production at the company’s producing asset — the Cheleken field in Turkmenistan — was 88,700 barrels per day in the first quarter of the year, up 23 per cent from the year-earlier period. It kept rising through March and April, when it was at 93,000 bpd. “This gives us added confidence in reaching our target of 100,000 bpd gross production later this year,” said Abdul Jaleel Al Khalifa, the company’s chief executive.

Although the proposed cut would be the company’s first for a final dividend since the company was listed on the Irish and London stock exchanges in 2010, the total dividend payment of 36 cents per share for last year — including the interim, already paid — would still exceed that of 2013. Analysts covering the company had on average forecast a full-year dividend for the company of 41.2 cents, but that was before the sharp fall in oil prices at the end of last year.

Dragon Oil gave no update on the bid approach it received last month from Emirates National Oil Company, which already owns 46 per cent of Dragon.

It reiterated that a board committee was formed to evaluate the approach and that Nomura International and Davy Corporate Finance had been hired as joint financial advisers. “There can be no certainty that any firm offer for the company will be made nor as to the terms on which any firm offer might be made,” the company said. Shares hit a low of 460 pence in December but have since climbed sharply and were trading at 637 pence in London in UAE time yesterday.

Follow The National's Business section on Twitter