London investment firm says ENOC offer inadequate

Noster Capital adds its voice to opposition of Dragon Oil takeover

Noster Capital says a public auction would stimulate fair value for its shareholders.
Noster Capital says a public auction would stimulate fair value for its shareholders.

London-based hedge fund manager Noster Capital has joined the growing list of larger shareholders in Dragon Oil (DGO) who are actively and vociferously against the terms of the proposed takeover of the company by the Emirates National Oil Company (ENOC). Noster’s managing partner, Pedro de Noronha, stated that the proposed offer of 455p per share materially undervalues the assets of Dragon Oil, which he believes is on a very profitable growth curve into the future. For this reason Noster Capital, on behalf of its investors, will reject ENOC’s proposed offer for Dragon Oil.

“ENOC’s offer for the minority interest it doesn’t already own in DGO is opportunistic and inadequate. It significantly undervalues its oil reserves and values their gas reserves at zero. Not to mention the strategic geopolitical location of its assets, well positioned for an energy starved China, which has proven in the recent past to be a willing minority partner in promising oil and gas projects. Furthermore, we believe the independent committee did not act in the best interest of shareholders by not putting the minority stake up for sale via a public auction that would stimulate fair value and where ENOC would be invited to submit a bid. We have proposed this motion to the independent committee back in June by letter to its advisors and have yet to hear back from them”.

Noster Capital LLP is the investment manager for Noster Capital Master Fund which invests for the medium to long term in public equities of companies who are selling at deep discounts to their intrinsic value. Noster Capital initiated its investment in Dragon Oil in March 2009, when the shares were trading at 145p.

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