Dragon Oil, the Irish exploration company, has begun searching for buyers for 46 per cent of the company after its largest shareholder and chairman, Mr Arifin Panigoro, announced he intended to dispose of his stake.
The company has said that Mr Pannigoro's decision to concentrate on interests in his native Indonesia was a "blow", but not one which should drastically affect the company's fortunes.
The most likely outcome is that Dragon will now be the subject of a takeover bid from a large exploration company. Among those being mentioned are Texaco, which already has a joint venture in three gas discoveries, offshore from Thailand with Dragon.
The company, which is valued at £160 million sterling, has appointed Dresdner Kleinwort Benson and Goldman Sachs to find suitable buyers for the shares. The company says the stake may be sold to another oil company or be placed with either one or a group of institutional investors. Any buyer who acquires more than 30 per cent of the shares is obliged under stock exchange rules to make a bid for the whole company.
The other main shareholder in Dragon is Belle Corporation, which holds 18.8 per cent of the equity. One of Dragon's directors, Mr Roberto Ongpin, another Indonesian, has a large interest in Belle Corporation and some sources have speculated that it may also sell.
Mr Graeme Thomson, Dragon's financial director, said Belle Corporation would "review" its stake in the company in the light of what buyers came forward for the 46 per cent stake. He said Mr Panigoro's decision "does not come at a good time" with the recent fall in the oil price adversely affecting all oil stocks.
Mr Panigoro said yesterday he had every confidence in the assets and management of Dragon, but with the "current conditions and opportunities emerging in Indonesia, I wish to focus my efforts there".
Dragon did not trade in Dublin yesterday but in London it was down from 53p to 49p. When the market opens on Monday, there is likely to be some selling of the shares. Its share price has been depressed for some months, with some dealers expressing nervousness about the dominant position on the share register of Mr Panigoro. His decision may benefit the share price in the long term on this basis.
Dragon has been one of the better performing exploration stocks on the Dublin market, benefiting from a series of positive announcements concerning its 50 per cent stake in Block II offshore Turkmenistan.
