Baillie Gifford, whose clients own more than 7 per cent of Dublin-listed Dragon Oil, says the recent buyout offer for the company by the Emirates National Oil Company (Enoc) "materially undervalues" its growth potential.

The offer for the 46 per cent of Dragon that Enoc currently does not own values the explorer at more than €5 billion.

Baillie Gifford has called for the addition of a "contingent payment note" for minority shareholders that would provide an annual payout based upon the performance of its prime asset in Turkmenistan.

“We have offered to engage in discussions about structuring a contingent payment note in the event that production from the Cheleken contract area [in Turkmenistan] were to reach growth production milestones over the coming years,” said Baillie Gifford.

"Dragon Oil owns a valuable growth asset that we believe has the potential to see production rise materially over the next decade," said Richard Sneller, its head of emerging markets.

Dragon will delist from the Dublin and London markets if the deal goes ahead. A formal offer document is expected in coming weeks.