Commercial Activity

Dana continues to undertake a high level of commercial activity in line with its strategy of adding value through its front-end exploration work and then accelerating cash flow wherever possible through both development and asset trading.

Earlier this month, Dana announced the acquisition of Devon Energy Corporation’s entire upstream petroleum business interests in Egypt, spanning eight concessions. This is Dana’s single biggest deal to date and represents a significant growth step for the Company. The businesses are an excellent strategic fit with Dana’s existing properties in the Nile Delta and Gulf of Suez. The purchase price at the effective date of 1 January 2007 is $375 million. In addition to receiving the oil and gas production and exploration assets, Dana will also gain approximately $67 million of working capital in Devon Egypt as at the effective date. Dana will pay the net consideration of approximately $308 million in cash (as adjusted at completion for ongoing 2007 production income and expenditure) via a newly arranged banking facility with ABN Amro Bank. During 2006, Devon Egypt had working interest production of approximately 12,300 barrels per day, and USGAAP operating profits of approximately $53 million.

The portfolio of assets comprises interests in eight Production Sharing Contracts (“PSCs”), with 13 fields currently producing. Upon completion, the acquisition will add production of approximately 12,500 barrels of oil per day to Dana and add approximately 30 million barrels of proven and probable reserves, all on a working interest basis. The portfolio contains significant upside potential within the producing fields through identified infill drilling and well workover opportunities. There are also a substantial number of new targets to exploit through drilling in the largely unexplored Production Sharing Contract areas. The acquisition is subject to the normal regulatory and partner approvals and is expected to be completed during the second half of 2007.

In the last year Dana also agreed a number of multi-asset deals with Gaz de France. These have increased Dana's interest in the Johnston gas field to 49%, delivered a 25% interest in the Anglia gas field and an initial 30% equity in the West El Burullus concession, offshore Nile delta, Egypt. This activity has also covered most of Dana's drilling costs for its last three deep-water wells offshore Mauritania, where Dana has retained operatorship. In addition, Dana has recently completed the acquisition of an additional 25% interest in the Cavendish gas development in the UK (taking Dana up to 50%) resulting in an expected near term production increase of approximately 4,300 boepd. The acquisition of a further 20% interest in West El Burullus (taking Dana up to 50%) and interests in two exploration licences offshore Norway are also progressing towards completion.

Dana has made a strategic entry into Norway, having carefully considered how it could apply its exploration led business model to the significant remaining potential in the country. As part of the Gaz de France transactions, Dana secured interests in the PL311 licence in the mature Norwegian North Sea, and in a higher risk frontier licence PL329 in the Norwegian Sea off mid Norway, subject to standard regulatory approval. A wildcat well in PL329 recently completed drilling and did not encounter hydrocarbons, however drilling is planned on the more attractive, lower risk structure in PL311 later in the year. Further opportunities to grow Dana's interests in Norway are actively under evaluation.

Dana has increased its interests in the GKA through the acquisition of a 50% interest in Block 21/20b, which includes the Christian discovery, and a 25% interest in Block 21/20a, which includes the Bligh discovery. Dana will now work with its co-venturers in these blocks to progress development. Subject to third party approval, Dana has agreed terms to increase its interest in the Melville oil discovery and surrounding exploration acreage in the Northern North Sea, which is adjacent to the Dana operated Hudson field. Dana has put itself forward to become operator of Melville and will be in a strong position to actively progress exploration and development of this area alongside Hudson. Dana has also agreed a farm-in with Wham and Ithaca Energy to acquire a 25% interest in Blocks 48/3a and 48/4, which are adjacent to the Babbage discovery and Johnston field, by carrying 33% of the costs through a seismic programme and exploration well. Tullow Oil has also entered these blocks through this transaction and will be operator going forward.

In Morocco, Dana has signed two deals to acquire new interests. Firstly, Dana agreed to exchange a 3% interest in Blocks L5 and L7, offshore Kenya, for a 15% interest in the Tanger-Larache concession, offshore Morocco. This exchange deal remains subject to Kenyan government approval. Secondly, subject to the approval of the Moroccan authorities, Dana acquired a 50% interest and operatorship in the Bouanane block, onshore eastern Morocco, adjacent to the border with Algeria. Some seismic has already been acquired and drilling could take place in both these areas as early as 2008.

In Egypt, Dana completed a transaction with Compania Espanola de Petroleos S.A. (CEPSA) to acquire a 20% interest in the South Feiran Concession, located offshore in the Gulf of Suez. A 3D seismic survey has already been shot and the current plan is to drill a well late 2007 or early 2008. Dana has also signed an agreement with BP Exploration (Delta) Limited to acquire a 25% interest in the exploration Contract Area A in the North Ghara Concession, located in the Gulf of Suez, close to existing production infrastructure and with new 3D seismic currently being acquired.

During the last two years, Dana has built a significant position in both Morocco and Egypt through a number of low cost transactions. Each of these countries is delivering attractive exploration opportunities. Following the Devon acquisition, the commercial activity is likely to continue with a number of further deals already under discussion.