Dragon Oil drops Petroceltic takeover on weak oil prices

LONDON (Reuters) – London-listed oil producer Dragon Oil has dropped an $800 million takeover offer for rival Petroceltic, blaming weak oil prices that have fallen around 35 percent since the deal was first announced in October.

“Dragon Oil now confirms that, in the light of prevailing market conditions, it no longer intends to make an offer for Petroceltic,” the company said in a statement on Monday.

The news sent Petroceltic shares 32 percent lower to 118 pence by 0836 GMT, while Dragon Oil shares fell 1.7 percent.

The dropped bid is the latest casualty of a steep drop in global oil prices as companies reprioritise investments against a backdrop of lower returns from oil production.

Dragon Oil offered 230 pence a share for Petroceltic in early October.

The deal would have given Turkmenistan-focused Dragon Oil a firmer footing in Algeria, where Petroceltic owns a number of gas projects.

Petroceltic said separately on Monday that its flagship Ain Tsila gas condensate project in Algeria would unlikely be affected by weak crude prices.