A company owned by the sovereign wealth fund of Dubai has launched a takeover of Dragon Oil, the London-listed explorer, in one of the biggest deals of its type on the British markets this year.

Emirates National Oil Company (Enoc) said that it had agreed to pay £1.15 billion for the 48 per cent of the shares in the Turkmenistan-focused oil explorer that it does not already own.

The deal drew criticism from City analysts, who said that it undervalued the group, one of a handful with a presence in the Central Asian nation, which is believed to have the fifthlargest gas reserves in the world.

Dragon is producing about 50,000 barrels of oil per day at an offshore site in the Caspian Sea and has plans to increase this to 100,000. Dragon’s committee of independent directors recommended that investors should accept the 455p-a-share bid, which values the group at £2.36 billion, a 35 per cent premium on the closing price on the last trading day before it said that it had received a bid approach.

Tim Hurst-Brown, oil analyst at Mirabaud, the Swiss bank, said that it was a “lowball offer” that did not reflect the full value of Dragon’s substantial but as-yet undeveloped gas reserves in Turkmenistan.

Peter Hutton, of NCB, the broker, said that shareholders should hold out for a higher price and raised his target for the stock to 805p.

Enoc said in June that it was considering an offer for Dragon, as the company sought to bolster its international presence.

Turkmenistan is believed to have gas reserves of up to 14 trillion cubic metres, only 20 per cent less than Russia, according to research undertaken last year. It is likely to be a key player in meeting global energy demand for decades to come.

Saeed Abdullah Khoory, Enoc’s chief executive, said the deal “fits Enoc’s aim to become a vertically integrated oil and gas group”.

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