Possible offer for Dragon Oil plc

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION

This announcement is not an announcement of a firm intention to make an offer under Rule 2.5 of the Irish Takeover Rules and there can be no certainty that an offer will be made

21 May 2015

 Emirates National Oil Company Ltd. ("ENOC") L.L.C.

Statement regarding a possible offer for Dragon Oil plc ("Dragon Oil")

Following the announcement by ENOC on 17 March 2015 confirming that it had made an approach regarding a possible offer for Dragon Oil, ENOC confirms that it has been in discussions with the independent committee of the board of Dragon Oil (the "Independent Committee") regarding the terms of a possible cash offer for Dragon Oil.

As a result of those discussions, and having considered initial shareholder feedback and market commentary around the possible offer price, ENOC is proposing a possible cash offer of 735 pence per Dragon Oil share (the "Proposal"). ENOC informed the Independent Committee of the Proposal on 14 May 2015. The Proposal marks a substantial increase since the opening proposal put forward to the Independent Committee on 15 March 2015.

Proposal

The Proposal of 735 pence per Dragon Oil share values the entire issued share capital of Dragon Oil at approximately £3.6 billion[1]and represents:

· a premium of 44.3 per cent to the closing price of 509.5 pence per Dragon Oil share as at close on 13 March 2015, the business day immediately before the date of the first approach by ENOC

· a premium of 38.0 per cent to the volume weighted average Dragon Oil share price of 532.5 pence over the 90 day period ended 13 March 2015

· a premium of 14.0 per cent to the closing price of 645.0 pence per Dragon Oil share as at 20 May 2015, the business day immediately before the date of this announcement

As at close on 13 March 2015, the business day immediately before the date of the first approach by ENOC, the Dragon Oil closing price was 509.5 pence per Dragon Oil share. As at 31 March 2015, Dragon Oil holds £1,243m of net cash[2] on its balance sheet, which represents 251.8p of cash per Dragon Oil share. Adjusting the Proposal for this cash per Dragon Oil share implies a cash adjusted price of 483.2 pence per Dragon Oil share. Adjusting Dragon Oil's closing share price of 509.5 pence as of 13 March 2015 implies a cash adjusted price of 257.7 pence per Dragon Oil share. Accordingly, on a cash adjusted basis, the implied premium is 87.5 per cent.

ENOC believes that the Proposal represents full and fair value to Dragon Oil's shareholders and is capable of being recommended to Dragon Oil's shareholders. The Proposal will be fully funded from ENOC's existing cash resources and there is no diligence pre-condition given ENOC's position as a 53.9% shareholder in Dragon Oil.

Strategic Rationale

ENOC has taken the strategic decision to become a fully integrated global oil & gas company and is looking to further diversify its sources of cash flow by operationally consolidating its upstream footprint. The combination of ENOC's existing downstream position and skillset with Dragon Oil's upstream operating experience represents a key step towards creating an international integrated oil & gas company.

To date, ENOC has maintained an arm's length approach with regards to its dealings with Dragon Oil. Going forward ENOC will look to undertake a more active role, in line with a typical majority shareholder, in the management and future strategic direction of Dragon Oil, subject to the terms of the relationship agreement between ENOC and Dragon Oil, together with any applicable law, regulation or stock exchange rule.

Commenting on the Proposal on behalf of ENOC, Saif Al Falasi, Group Chief Executive said: 

"We have great respect for the board and management of Dragon Oil. Separately, we have worked constructively with the Independent Committee over the past two months to put forth a proposal to shareholders that is capable of being recommended.

We believe the Proposal is full and fair and provides an excellent opportunity for Dragon Oil's shareholders to realise significant value today. There is great uncertainty in the sector and we believe, as a long term and supportive shareholder, that Dragon Oil has achieved as much as is possible through its existing upstream strategy. Moreover, Dragon Oil stands to benefit significantly from being part of the integrated platform that ENOC offers. To that end, we want to ensure that all of Dragon Oil's shareholders have the opportunity to evaluate the Proposal on its merits.

Our strategic vision is to become a leading oil and gas company by expanding our presence in international markets and establishing an exploration and production portfolio. Together, ENOC's board and I are highly enthusiastic at the prospect of this potential combination and I hope this attractive Proposal will be supported by Dragon Oil's shareholders."

Next steps

ENOC intends to meet with Dragon Oil's shareholders to discuss the Proposal.

Further announcements will be made as appropriate.

Enquiries:

Basis and Sources of Information

1. Closing prices sourced from the London Stock Exchange Daily Official List, save for volume weighted closing prices which are sourced from FactSet Research Systems Inc. data.

Legal Information

The release, publication or distribution of this announcement in or into certain jurisdictions may be restricted by the laws of those jurisdictions. Accordingly, copies of this announcement and all other announcements relating to the combination are not being, and must not be, released, published, mailed or otherwise forwarded, distributed or sent in, into or from any restricted jurisdiction. Persons receiving such announcements (including, without limitation, nominees, trustees and custodians) should observe these restrictions. Failure to do so may constitute a violation of the securities laws of any such jurisdiction. To the fullest extent permitted by applicable law, the companies involved in the combination disclaim any responsibility or liability for the violations of any such restrictions by any person.

The Directors of ENOC accept responsibility for the information contained in this announcement. To the best of the knowledge and belief of the Directors of ENOC (who have taken all reasonable care to ensure that such is the case), the information contained in this announcement is in accordance with the facts and does not omit anything likely to affect the import of such information.

Barclays, which is authorised by the Prudential Regulation Authority and regulated in the United Kingdom by the Financial Conduct Authority and the Prudential Regulation Authority, is acting exclusively for ENOC and for no-one else in connection with the matters set out in this announcement and will not be responsible to anyone other than ENOC for providing the protections afforded to clients of Barclays nor for providing advice in connection with the matters set out in this announcement.

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this announcement or otherwise.

A copy of this announcement will be available at www.dragonoiloffer.com

The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.

Dealing Disclosure Requirements

Under the provisions of Rule 8.3 of the Irish Takeover Rules, if any person is, or becomes, "interested" (directly or indirectly) in 1% or more of any class of "relevant securities" of Dragon Oil or ENOC, all "dealings" in any "relevant securities" of Dragon Oil or ENOC (including by means of an option in respect of, or a derivative referenced to, any such "relevant securities") must be publicly disclosed by not later than 3:30 p.m. (Irish time) on the "business day" following the date of the relevant transaction. This requirement will continue until the date on which the Scheme becomes effective or on which the "offer period" otherwise ends. If two or more persons co-operate on the basis of any agreement either express or tacit, either oral or written, to acquire an "interest" in "relevant securities" of Dragon Oil or ENOC, they will be deemed to be a single person for the purpose of Rule 8.3 of the Irish Takeover Rules. Under the provisions of Rule 8.1 of the Irish Takeover Rules, all "dealings" in "relevant securities" of Dragon Oil by ENOC or "relevant securities" of ENOC by Dragon Oil, or by any person "acting in concert" with either of them must also be disclosed by no later than 12 noon (Irish time) on the "business day" following the date of the relevant transaction.

A disclosure table, giving details of the companies in whose "relevant securities" "dealings" should be disclosed can be found on the Irish Takeover Panel's website at www.irishtakeoverpanel.ie. "Interests in securities" arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an "interest" by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities. Terms in quotation marks are defined in the Irish Takeover Rules, which can be found on the Irish Takeover Panel's website.

If you are in any doubt as to whether or not you are required to disclose a "dealing" under Rule 8, please consult the Irish Takeover Panel's website at www.irishtakeoverpanel.ie or contact the Irish Takeover Panel on telephone number +353 1 678 9020; fax number +353 1 678 9289.