Tonight:
5°c
Dragon is burnt by drill bungs scandal
Robert Lea24 Mar 2009
The integrity of the London-listed small-cap market for oil and gas stocks took another battering today after Dubai-backed Dragon Oil admitted managers have been taking bungs.
Dragon Oil said marketing and procurement executives took backhanders from contractors on Caspian Sea drilling projects.
This news follows the stock-market suspension of onetime AIM oil-and-gas darling Sibir Energy, caught up in a row over failure to account for hundreds of millions of dollars paid out to buy a Russian shareholder's Moscow property developments.Dragon, listed in London and Dublin, is 52%-controlled by ENOC, the state-owned Dubai oil company. It said it had replaced a number of managers for "improper conduct" after they overrode "various internal controls".
A Stock Exchange statement said they "appear to have obtained financial benefits for themselves securing improper payments from certain contractors." Dragon shares have lost their fire in recent weeks after a 70% slump from last year's highs. They fell a further 8½p today to 179p.
Reader views (4)
At the time of the initial announcement Dragon said they did not believe that this would affect them financially. As has turned out following investigation.
This begs the question; why did they bother to make this public? The announcement caused a 30% drop in share price which makes me wonder if this was the desired outcome.
In my opinion the shares, even though the price has recovered, are still extremely cheap. In common with most oil and commodity stocks priced in Sterling but earning in US dollars, they have been marked down twice due to market fall and Sterling depreciation.
- Harry H, London UK, 26/03/2009 10:52
Report abuse
Should read $800 million in cash and no debt
- A Smith, LONDON ENGLAND, 26/03/2009 02:44
Report abuse
I hope Dragon have more than $800 million cash Mr Smith!!
Like you say though - there's no material impact on Dragon's P+L so more of an embarrassment than a concern.
The share price fall was due to an overall market drop and wasn't specific to Dragon. It's up 6p on the day as I write this so the market is clearly unconcerned!
- Gbpete, UK, 25/03/2009 14:35
Report abuse
Enoc own 52% of Dragon, Dragon have $800 of cash, so hardly 'backed' by the government.
You forgot to mention the part in the ceo's statement that there should be no material financial impact.
So you are comparing a Russian multimillion fiddle against a middle east few back handers - hardly comparable
- A Smith, LONDON , ENGLAND, 25/03/2009 08:27
Report abuse
