Press Release
28th June 2002
DANA PETROLEUM PLC
("DANA" OR "THE GROUP")
Posting of Circular relating to Proposed Acquisition of North Sea Assets
Dana is pleased to announce that it has posted a circular ("the Circular") to its shareholders, which contains further details of Dana's acquisition of a portfolio of UK North Sea production, development and exploration assets from Agip (UK) Limited and its affiliates ("the Acquisition"). Shareholder approval will be sought at an Extraordinary General Meeting of the Company, convened for Tuesday 23 July 2002 at 11.45 am (or following conclusion of the Company's Annual General Meeting to be held at 10.30 am on the same day, if later).
The posting of the Circular follows the announcement of the Acquisition by Dana, on 21 March 2002. Since that announcement, Dana has obtained approval for the Acquisition from the UK Department of Trade and Industry and has also obtained all the consents, approvals and waivers necessary from the other co-venturers involved in the licences which are the subject of the Acquisition.
Background to and Reasons for the Acquisition
Dana's strategy is to deliver strong growth in production and earnings through the development and production of a low-risk, balanced portfolio of oil and gas assets, whilst simultaneously building and executing a high-impact exploration programme in which there are numerous opportunities for step increases in value. Dana generates its production and development projects both through its own exploration success and through acquisition.
Thus, in line with this strategy, the Acquisition will:
- represent a major growth step for Dana, almost doubling the Group's current production to approximately 11,000 boepd, with the prospect of a further increase to around 20,000 boepd during 2003 when the Otter and Caledonia fields are in production;
- add proven and probable reserves of approximately 19 million barrels of oil equivalent and proven, probable and possible reserves of approximately 50 million barrels of oil equivalent;
- significantly lower the risk profile associated with Dana's asset portfolio by diversifying its sources of cashflow and increasing the proportion of the Group's earnings generated in the UK to over 90 per cent;
- be paid for substantially from debt finance, enabling the Group to maintain an acceptable level of gearing whilst ensuring that Dana can continue to drive forward its international exploration programme; and
- in the Directors' opinion, add significant value to the Company, a view supported by the net present value of the assets acquired as reported in the Circular by independent experts.
Directors' Recommendation
The Directors of Dana unanimously recommend shareholders to vote in favour of the resolution to be proposed at the Extraordinary General Meeting, either in person or by completing the form of proxy accompanying the Circular and returning it to the Company's registrars so as to be received as soon as possible and by no later than 11.45am on 21 July 2002.
The Directors of Dana intend to vote in favour of the resolution in respect of their own beneficial holdings amounting in aggregate to 11,138,532 Ordinary Shares, representing 1.0 per cent. of the Company's existing issued ordinary share capital.
Current trading and prospects
For the year ended 31 December 2001, the Group reported a preliminary pre-tax profit of £7.7 million (2000: £7.4 million) on a turnover of £27.1 million (2000: £29.9 million). Since December 2001, Dana's production from its Claymore, Victor and South Vat-Yoganskoye assets has continued at approximately 5,700 boepd.
In early 2002 a new well, C75, was drilled on the Claymore field to exploit an unswept area in the crest of the main reservoir. This well came on stream in April 2002 and is producing at a gross rate of around 6,000 bopd (448 bopd net to Dana). An appraisal well is currently being drilled into the 'Drum' accumulation west of the main reservoir, discovered in 1990. Recent work by the field operator indicates that this accumulation could be substantially larger than previously estimated.
The acquisition of a portfolio of North Sea assets from Conoco, including the Caledonia field development, and the undeveloped Cavendish, Enoch and J1 fields was completed on 1 May 2002. The Caledonia development, a subsea tie-back to the existing Britannia platform, is on track for first oil production in October 2002. Net initial production to Dana is anticipated to be 3,000 bopd. Field development options for the Cavendish gas field and Enoch oil field are being studied. In the Dutch sector of the North Sea, a field development plan for the F16-E gas development is under discussion.
A plan for the development of the Ujung Pangkah gas field in Indonesia has been submitted to the state oil and gas company, Pertamina. Project sanction is expected to take place in 2002, leading to first gas in 2004. Gross recoverable reserves are projected to be in excess of 450 bcf of liquids-rich gas. Progress is also being made on plans to develop the Sidayu oil accumulation and the oil leg of the Ujung Pangkah field.
A well to test the Barbara prospect in Block 23/16c of the Central North Sea was recently drilled. The primary well objective was to explore for hydrocarbons around a pronounced salt diapir structure, a play type which has yielded several important North Sea discoveries such as the Pierce and Mungo oil fields. At present, the well results remain confidential and an announcement is expected to be made in due course.
In Australia, Dana has negotiated an agreement with two Australian companies, Origin Energy Resources Limited and Voyager Energy Limited, for them to farm into the WA-226-P licence in the Perth Basin on a promoted basis. Preparations are underway to drill an exploration well on the 'Morangie' prospect in late 2002 and this undrilled prospect is interpreted to have the potential to contain up to 250 million barrels of oil in place. Dana will be free carried through the drilling cost whilst retaining a 30 per cent working interest in any discovery.
In Ghana, Dana is planning to drill a second exploration well in third quarter 2002, following the WT-1X oil discovery made in 2000.
In relation to the assets which are the subject of the Acquisition:
The Otter field development has progressed in line with the project schedule. Subsea facilities are fully installed and topsides modifications to the Eider platform are approaching completion. The rig has arrived on location and commenced drilling of the first development well with first oil expected before the year end.
Hudson field oil production is averaging 17,500 bopd (3,500 bopd net to Dana). The Banff field is currently producing at around 11,000 bopd and 33 mmscfpd (2,000 boepd net to Dana) with a rig due on location shortly to spud the B5 horizontal producer. First oil from this new development well is expected by November 2002.
In view of the above, and the increase in production and opportunities expected to result from the Acquisition, the Directors of Dana are confident regarding the outlook for the enlarged Group for the current financial year and beyond.
Tom Cross, Chief Executive of Dana, said today:
"This deal represents one of the most important achievements since Dana was founded. In line with strategy, the new assets will significantly increase Dana's oil and gas production, reserves and financial strength, thus allowing the Company to drive forward its high-impact exploration programme."
Enquiries to:
| Dana Petroleum plc | Tel: 01224 652400 | |
| Tom Cross, Chief Executive | ||
| Graham Stewart, Finance Director | ||
| College Hill Associates | Tel: 020 7457 2020 | |
| Archie Berens |
Copies of the Circular dated 27 June 2002 and of the Report and Accounts of Dana Petroleum plc for the year ended 31 December 2001 have been submitted to the UK Listing Authority and will shortly be available for inspection at the UK Listing Authority's Document Viewing Facility, which is situated at:
The Financial Services Authority
25 North Colonnade
Canary Wharf
London E14 5HS
Tel. 020 7676 1000
