DRAGON OIL shareholders have formally approved the acquisition of Larmag Energy Assets, at an extraordinary general meeting yesterday.

The shareholders were also told that the company's net loss before items was cut by 30 per cent to .3 million (£1.46 million) last year.

The acquisition of 60 per cent of LEA more than trebles Dragon's proven and probable oil and gas reserves to over 170 million barrels of oil equivalent. It is expected to raise its production from its current level of around 500 barrels to over 30,000 over the next few years.

The initial programme of workovers and drilling on the Caspian Block II is expected to begin in July. Preparations for drilling new wells on Block II will commence later in the year.

The company is also planning two new wells in the Far East. It will be participating in a new appraisal well on its Maniguin discovery on shore the Philippines in mid year.

The company also expects to drill a well on its Thailand offshore site by the year end.

Mr Arifin Panigoro, the company's newly elected chairman and now its largest shareholder, said the acquisition and the associated £50 million fund raising will allow the company a "unique opportunity" to build its oil and gas reserves.