The latest victim of the plunging oil price is a £500m deal which will not now go ahead.
Dragon Oil made an initial approach for rival energy company Petroceltic in July and ultimately offered 230p a share or £500m in early October, but since then crude prices have dropped around 35%.
So Dragon has decided it will not proceed with an offer “in the light of prevailing market conditions.”
The news sent Petroceltic tumbling 39% or 68.75p to 105.25p while Dragon is up 3p at 503.5p.
Petroceltic said it was confident in its strategy and maintained that its flagship gas concentrate project in Algeria, expected to start production in 2018, was unlikely to be affected by the current volatility in the oil markets.
Analysts at Macquarie said:
Petroceltic shares have recently been supported by the discussions. However, we now expect the stock could fall below our core net asset value of 166p a share. The company will update its strategy and future plans at a Capital Markets Day, for which a date will be confirmed shortly.
