News

March 25, 2009

Ahead Of Friday’s Results Announcement, Dragon Oil Provides Some Reassurance Following Investigation Into Procurement Irregularities

After last month’s shock announcement that it was investigating possible fraud in its marketing and contracts departments, Dragon Oil threw its investors some comfort on Tuesday when it announced that the matter would have no material impact on its financial position. This is welcome news as the current climate would be severely unforgiving for any company facing an unexpected hole in its finances: the Middle East-backed company has a strong balance sheet with US$867 million in cash at the end of 2008 and production of more than 40,000 barrels per day. Investors will, however, be keen for more detail on the scale of the problem and further reassurance that this is now a closed matter with the focus once more on growth from the company’s key project in Turkmenistan.

The investigation was launched in late February when the Dubai-headquartered company engaged auditing giant KPMG to assist in an in-depth assessment of possible irregularities in its procurement procedures. The company, which is listed on the London and Irish Stock Exchanges, said it was investigating improper conduct between former senior managers in the suspect departments and, given these alleged irregularities, delayed the publication of its full year results. Those results, which were...