(DGO.L) Dragon Oil PLC Buy/Sell

Dragon Oil Plc (LSE: DGO) is an innovative international oil and gas development and production company. Dragon holds 100% interest in and is the operator of the Production Sharing Agreement for the Cheleken Contract Area (‘PSA’) which is in the Caspian Sea, offshore from Turkmenistan in Central Asia. The PSA has a 25-year term, expiring in May, 2025, with the exclusive right to negotiate for an extension of not less than ten years.

Approximately 52% of Dragon Oil’s equity is held by the Emirates National Oil Company (ENOC) LLC, a company ultimately owned by the Government of Dubai.

Based on the latest reserves certification on the Cheleken Contract Area by an independent energy consultant, the remaining proved and probable recoverable reserves as at 31 July 2009 on a working interest and entitlement basis were 625 million barrels and 282 million barrels respectively, based on assumptions including extension of the terms of the PSA for the additional ten years. In addition, there is an estimated gross contingent gas resource of approximately 3.1 trillion cubic feet in the Cheleken Contract Area. The development and commercialization of gas resources from the Cheleken Contract Area remains a top priority and Dragon Oil expects discussions with the Turkmenistan government regarding the gas sales agreement to progress during 2010.

In January 2010, Dragon Oil reported an average daily production rate increase of 9% in 2009 over 2008 and landmark production of 50,000 bopd achieved at the turn of 2009/2010. Dragon Oil plans to complete up to 11 wells in 2010 for a total of up to 40 development wells, including five appraisal wells, during 2010-12, targeting an annual production growth of 15% in 2010 and 10% to 15% on average in 2011-12. It is also anticipating a bullish outlook for the next three years due to:


1. Strong commodity prices;
2. A cash balance of more than US$1.1 billion;
3. No corporate debt.

While Dragon Oil is confident of the long-term potential and value of its existing Cheleken asset, the plans for the future also include looking at other projects to expand and diversify Dragon Oil's asset base. In line with this strategy, in December 2007, Dragon Oil purchased their minority interests in Blocks 35 (10%), 49 (up to 10%) and R2 (10%) in the Republic of Yemen from Virgin Resources Limited. Dragon Oil’s stated strategy is to find assets that add competitive advantage and provide a strategic fit with the group and this will be a key activity during 2010.

Financial

Despite weaker crude demand, Dragon Oil achieved a 40% increase in sales volumes in 2009. For the full year 2009, lower oil prices reduced revenues 12% to $623.5 million versus 2008, while profits declined 30% to $259 million and earnings per share slid to $50.3 cents from $71.8 cents. Oil prices had hit five year lows at the end of 2008.

Capital expenditure on infrastructure for 2010-2012 is estimated at $600-700 million, including $250 million allocated for 2010 projects, which will include building platforms and upgrading the central processing facility. Expenditures on drilling and infrastructure projects in Turkmenistan for 2009 was $317 million, of which 50% was attributable to drilling and the remaining balance spent on infrastructure.

Two Turkmenistan fields

Until 1991, Turkmenistan was a constituent republic of the Soviet Union. Of the five nations surrounding the Caspian Sea – Azerbaijan, Kazakhstan, Iran, Russia and Turkmenistan, the hydrocarbon riches of Turkmenistan remain the last great prize, sought and fought over by Russia, China, Iran and Western investors. Western energy companies attracted to Turkmenistan will need to do their homework before jumping in, which gives Dragon Oil a competitive advantage as a long established player.

Dzheitune (Lam) is one of Dragon Oil’s two oilfields in the Cheleken Contract Area in the Caspian Sea, offshore Turkmenistan. Recent drilling results include th

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The MMs are doing their best to tree shake. Normaly a drop would trigger ATs but very little is happening. Its been like this for a week now.

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Surely this has to be lowest level of trading in a long time?

207K total by 16:15??

Fido or Downes gone on their holidays?

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So the statement on their website is ambiguous. It says it has a primary listing on tre LSE but it is not really a full primary listing, but a secondary primary listing. Is this correct. What is the signicance of this? Does it mean that as a secondary primary listing it cannot enter the FTSE100?

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I take it back slowAndSteady, sorry, I have found the passage regarding the BoD intentions..

Corporate restructuring

On 27 March 2009, the Board of Dragon Oil plc announced the proposed restructuring of the Company by means of a scheme of arrangement by putting in place a Bermuda-incorporated company as the new ultimate holding company of the Group. Following the restructuring, the Company was planning to apply for a primary listing on the London Stock Exchange and a secondary listing on the Irish Stock Exchange. Following the approach received from ENOC, the corporate restructuring was put on hold. The Board's intention is to continue with a corporate restructuring and the Board is currently reviewing options.

However a application for primary listing would still be a positive step in my opinion

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That sounds a goood course of action.

You might try selling at some of the peak prices when the sp attacks the £5 barrier then waiting until it falls back again. It has done this a few times lately. Perhaps there is some manipulation to prevent the sp rising completely out of the reach of ENOC. This might be enough to cover your buy/sell costs or even show a small profit.

However just because the sp has behaved this way recently doesn't mean it will continue to do that. The next time it approaches £5 it may break through and continue on up.

Good luck whatever you decide and congratulations on the hefty profit you have made.

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DGO is NOT an AIM share
DGO is NOT an AIM share
DGO is NOT an AIM share
DGO is NOT an AIM share
DGO is NOT an AIM share

S

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Highanddry & Gauty

DGO is not an AIM share. Full listing ISE & LSE with primary listing ISE.

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I am not sure about it but it was definitely stated they were in the primary listing. When you go to their web site it clearly states the following:
"Dragon Oil plc is an independent oil development and production company listed under a dual primary listing on the London and Irish Stock Exchanges."
Can an AIM listing be quoted as a Primary listing?

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http://www.proactiveinvestors.co.uk/companies/news/14548/dragon-oil-solid-balance-sheet-underpins-increasing-profile-in-london-14548.html

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pannon,

Over on the ADVFN BB there is talk that the SP will be rising from 31 March as some forced sellers with have closed their positions by then. It all sounds a bit like ramping but it was suggested by someone I respect a lot.

You obviously wouldn't want to miss out on a big SP rise if that's the case.

S

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Correct me if I'm wrong here Gauty but I beleive they are list on the ISE and AIM only. The BoD only said they were revisiting trhe possibility of full listing on the LSE in their yearly statement in Jan/Feb

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I thought we had this discussion a while back. It was declared then that DGO are already on the main listing. Entering the top 100 is just a function of the companies capitalisation. And they are very near to this position already.

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My wife is sitting on a 6 figure profit on these and we are seriously considering selling before April 6th to pay the 18% CGT rate (some will go into net years ISA) . Shes best to wait until budget announcemnt but all pundits point to a major hike in this % within the next tax year . We are both long term holders and I hate the thought of her selling and me buying back to avoid the B&B ruling. However, the SP is stable just now so maybe this is the time to reset the profit clock. Having said that I hope I can buy them all back!

Any thoughts from an informative BB

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If this price dose stick around 450-500p mark for the next three months say then I would tend to agree that there might be something in what you are saying. Also it would confirm to me that this share price is being manipulated by some underhand party. A theory I have held for over a year now.
IMHO the BoD have to take positive action and push this company forward , not by investment in Dragons small area of interest ( its comfort zone)but expanding further out by hunting out and aggressively purchasing good investments. They also have to list on the LSE to gain recognition as a ‘want to be big player of the future’ if they wanting to be taken seriously. This action in its self will show PI’s how serious the company is and whether the BoD are truly independent of the ENOC grasp. If neither of these courses are followed I fear a second attempt by ENOC in the new year to take DGO into private ownership with a bid of around 550 to 600p will happen. This time PI’s only hope would be for a hostile approach from a third party to boost the price and bail out as it peaks. £12+ per share I fear will never be achieved because DGO as we know it will not exist to allow that figure to be achieved. Very sad but there you have it.

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Fagen,

Life has taught me to be a cynic. I don't trust the BoD, ENOC or any 'independent committee' at all.

I very much agree with the way you are thinking and also hope that the SP can raise suitably far enough to put a second bid out of the picture. However, the cynic in me says we will see a lot more of the £4.65- £5.00 range.

Best regards

Scuba

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Tell u what i think ,proberly not worth much but, I believe Enoc have to wait a year before they can buy, sell, put in another bid, idon't think Enoc have finished with bidding for DGO yet and this SP will hover around £4-50--£5 for the next year no matter what DGO come up with and that won't be a lot as Enoc tell them what to do,. What other company would sit on a Billion only DGO as Enoc wan't to get thier grubby little hands on it, with what DGO have and with whats in the pipeline this SP should imo have broken the£5 barrier a long time ago. you had one top man vanish after cashing in a million shares at £5+ proberly his get out as he wanted nothing to do with what was going on, i will be surprised if us PIs ever see the true value of DGO. there u have it MHO do hope i am wrong but i don't think so

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http://www.upi.com/Science_News/Resource-Wars/2010/03/18/Nabucco-set-for-2011-spokesman-says/UPI-61391268918187/

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http://www.offshore-mag.com/index/article-display/7075058995/articles/offshore/volume-70/Issue_3/Special_Report_Caspian_Sea/Caspian_Sea_set_for_offshore_resurgence.html

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Hope so too 12 quid !

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