Dragon Oil sees first half profits fall 37%

The Dubai-based Dragon Oil reported a 37 per cent drop in profits for the first half of the year, and raised doubts about the progress of takeover talks with its majority shareholder, Emirates National Oil Company (ENOC). It also said it was continuing to investigate accounting irregularities. Dragon, which produces oil and gas in Turkmenistan, is controlled by the Government of Dubai through ENOC's 52 per cent majority shareholding.

It said there was "no certainty" it would receive a formal offer from ENOC for the remaining 48 per cent of its shares. A preliminary offer was being evaluated by an independent committee advised by Davy Corporate Finance and HSBC Holdings, the company added. Dragon posted a profit of US$105 million (Dh385m) for the first six months of this year, down from $166.9m for the first half of last year. Revenue fell 29 per cent to $263.5m from $373.5m. The company blamed the weaker financial performance on lower oil and gas prices and a tax increase, but also said its output was below expectations.

"The first half of 2009 has been a chalenging period," said Dr Abdul al Khalifa, the chief executive of Dragon. tcarlisle@thenational.ae