Press Release

7th January 2003

DANA PETROLEUM PLC
("DANA" OR "THE GROUP")

Dana Exercises Options to Achieve a Direct Stake in Faroe Petroleum

Dana is pleased to announce that it has exercised its existing options to acquire shares in Føroya Kolvetni P/F ("FK"), the Faroese oil and gas exploration company. This has enabled Dana to convert its options in FK into a direct shareholding in Faroe Petroleum Limited ("FP"), the new UK registered holding company of FK. Dana has worked closely with FK since its inception in 1997. In return for Dana providing technical and strategic guidance under a 10 year co-operation agreement, Dana was awarded two low cost options to subscribe for in each case a 10% stake in FK at different formative stages of the company's development.

In 2000, FK was successful in being awarded two exploration licences in the first Faroes offshore licencing round, in conjunction with operator Agip Denmark B.V. Since then hydrocarbons have been discovered in early drilling in Faroese waters and, following encouraging results from 3D seismic, the Agip/FK joint venture plans to drill its first well on Licence 002 this summer.

Ahead of drilling, FP has been formed to allow UK investors to participate directly in this high potential basin immediately north west of the UK. FP has successfully raised new private equity capital to finance its 2003 exploration programme and in conjunction with this financing Dana has converted its options in FK and hence has now become a shareholder in FP.

An announcement providing further details of Dana's investment in FP will be made in due course.

Related Board Change

Dana also announces that with effect from 23 December 2002, Mr Graham Stewart has been appointed as the full-time Chief Executive of FP and therefore resigns from his position as Commercial Director with Dana.

Charles M Smith CBE, Chairman of Dana, commented:

"Following an extensive 3D seismic programme, a number of attractive prospects have been identified on the Agip/FK licences and we look forward to the joint venture's first well later this year. I would like to take this opportunity to thank Graham Stewart for his valuable contribution to Dana and to wish him every success at Faroe Petroleum."

For further information please contact:

Tom Cross, Chief Executive	Dana Petroleum plc	01224 652400
Mark Williams	Teather & Greenwood	020 7426 9000
Archie Berens	College Hill Associates	020 7457 2020