Dragon Oil still in talks with Petroceltic over offer

International exploration firm Dragon Oil has said it remains in discussions with Petroceltic over a possible offer as it announced it is on track to produce between 5 per cent and 10 per cent more oil this year.

Dragon Oil, which is backed by Dubai’s state oil company and produces in Turkmenistan, said last week it was in discussions with Irish-listed Petroceltic over a deal which would give Dragon exploration and production operations in North Africa and Kurdistan.

The offer is of the order of 230 pence sterling per share in cash, or £492 million (€627m) in total, and follows an extensive confirmatory due diligence exercise. Petroceltic’s board has said it is willing to recommend the offer to its shareholders.

In an interim management statement issued on Tuesday, Dragon said six new wells were completed in the third quarter while average daily gross production reached 80,510 barrels of oil per day (bopd), a 9.6 per cent increase compared to the level achieved in the first six months of the year.

Dragon said average production for September 2014 was 82,540 bopd.

Capital expenditure on infrastructure, drilling and exploration assets amounted to approximately $171 million in the third quarter, the firm said.

During the three-month period under review, Dragon Oil, in partnership with Enel of Italy, was awarded two exploration blocks in Algeria, Tinrhert Nord Perimeter and Msari Akabli Perimeter.

"I am glad to report that in the third quarter of 2014, the average gross production in the Cheleken Contract Area was 8.4 per cent higher compared to a year ago and grew by 9.6 per cent compared to the production level achieved in the first half of this year," said chief executive Dr Abdul Jaleel Al Khalifa.

"On the diversification front, September was an eventful month for us. Early that month, we were pleased to announce along with our operating partner Kuwait Energy an oil discovery in the first target, the Mishrif formation, in Block 9, Iraq. Then, Dragon Oil, in partnership with Enel of Italy, was successful in bidding for two exploration blocks in Algeria. This is an achievement in line with our diversification strategy and an entry into yet another North African country known to be rich in hydrocarbon resources and opportunities," he added.