Dragon in €870m production boost
DRAGON OIL, the Dublin-listed explorer which does most of its business in the Caspian Sea off the Turkmenistan coast, said yesterday that it plans to invest as much as $870m on oil and gas projects in the next 24 months to boost production.
Dragon is targeting annual output growth of 10pc to 15pc over the period, the company said yesterday in a statement. It intends to spend $250m on oil infrastructure to raise production 15pc this year.
Dragon is the seventh biggest company on the Dublin stock exchange with a market value of €2.72bn, more than Bank of Ireland and Allied Irish combined. Shares in the company have risen by a fifth this year, making the exploration company the fourth best performing stock on the ISEQ this year on optimism that the company is ready to exploit previously discovered wells.
"We have to be reasonable in our expectations because we don't want to commit to a much higher growth rate and then we can't make it," chief executive Abdul-Jaleel Al-Khalifa said. "Sometimes the progress with contractors there is not as pleasant as you want it to be, you have to be careful."
Dubai-based Dragon is seeking to expand in the Middle East, North Africa and Central Asia, making use of its $1.1bn cash pile. Last year, shareholders rejected a takeover bid from Dubai state-owned Emirates National Oil, which already holds 51.5pc of the explorer. "We are pursuing quite a few opportunities in different locations" to expand the business, Mr al-Khalifa said.
Dragon reported a 30pc decline in full-year profit to $259m as sales slid 12pc to $623.5m due to falling oil prices. The company's cash pile jumped 30pc.
This was "a very solid performance," Davy Stockbroker analyst Joe Langbroke said yesterday. "The group's focus will continue to be on maximising oil production from the existing Caspian project but it also continues to seek a degree of asset diversification.
Efforts to progress gas monetisation continue."
Dragon this month hired Saipem, the Italian oilfield- services company, to design a gas-treatment plant in Turkmenistan that will "enable production of high-quality treated sales gas". Discussions are continuing with the Turkmen government on pricing.
The explorer will complete an oil and gas trunk pipeline from fields in the Caspian Sea's Cheleken area to onshore units in Turkmenistan in the second half, it said.
It is expanding one of these units, the so-called central processing facility, and will be able to end flaring, or burning off gas, once it has completed next half after a delay from early 2010, Dragon said. (Bloomberg)