Though Dragon Oil’s (DGO) full-year output was temporarily constrained by sand control issues at some of its Caspian Sea wells, progress was made towards the 2015 production target of 100,000 barrels of oil per day (bopd), while a strengthening balance sheet funded a 50 per cent hike in the full-year dividend. The group also returned $200m (£127m) of excess capital through a share buy-back programme which concluded in October.
Dragon completed 15 wells during 2012, which was at the top-end of initial guidance. This enabled the group to expand its reserves by 3 per cent to 677m barrels, representing a 180 per cent replacement ratio against 2012 production. Average gross production rose by 10 per cent to 67,600 bopd, although this had reached 73,500 bopd through December. However, the overall increase in output was set against a 50 basis point reduction in Dragon's variable entitlement rate on gross production. Admittedly, 2011's entitlement figure - at 53 per cent - was at the upper end of expectations, but last year's reduction, along with a 23 per cent increase in the cost of sales, resulted in an 8 per cent fall in operating profits to $791m.
During 2013, Dragon plans to grow production at the lower end of its 10-15 per cent guidance. In January, the group secured a reliable export route through Azerbaijan, although infrastructure issues mean that prices for crude exports from the region remain at a considerable discount to Brent crude - Dragon anticipates 14-17 per cent.
Goodbody anticipates flat current year adjusted EPS of 119.9¢.
| DRAGON OIL (DGO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 590p | MARKET VALUE: | £2.9bn | |
| TOUCH: | 589-590p | 12-MONTH HIGH: | 656p | LOW: 480p |
| DIVIDEND YIELD: | 3% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 584¢ | NET CASH: | $2.14bn | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2008 | 0.71 | 499 | 72 | nil |
| 2009 | 0.62 | 345 | 50 | nil |
| 2010 | 0.78 | 515 | 75 | 14.0 |
| 2011 | 1.15 | 872 | 126 | 20.0 |
| 2012 | 1.16 | 809 | 119 | 30.0 |
| % change | - | -7 | -5 | +50 |
Ex-div: 3 Apr Payment: 3 May £1 = $1.57 | ||||
