Press Release
28th November 2001
DANA PETROLEUM PLC
("Dana" or the "Group")
DANA TRADES EXPLORATION SUCCESS FOR NEAR TERM
PRODUCTION AND BUILDS UK ASSET BASE
The Board of Dana Petroleum plc is pleased to announce that on 27th November 2001 it entered into an agreement with Conoco (U.K.) Limited and its affiliates to acquire, effective 1st October 2001, a portfolio of North Sea interests (the "Conoco Assets") with proven and probable reserves of approximately 9.4 million barrels. The portfolio includes a 25.8% interest in the Caledonia oil field which has recently received development approval and is scheduled to achieve first oil production in 2002. In exchange for the Conoco Assets, Dana will assign to Conoco its 3% interest in the Orca and Beta gas discoveries, pay an initial cash consideration of US$2.5 million and pay a deferred cash consideration of US$5 million over the next 3 years once important oil production milestones are reached in the Caledonia field.
INFORMATION ON THE CONOCO ASSETS
The Caledonia oil field, located in Block 16/26 immediately to the North of the Britannia field, is operated by Chevron and was discovered in 1993. Proven and probable reserves have been estimated by the operator to be 10.3 million barrels (2.6 million barrels net to Dana's 25.8% interest). Up to a further 6 million barrels of possible reserves will be the target of an appraisal well to be drilled in 2002 as the first step in the field development. First oil is anticipated in October 2002 at initial production rates of 12,000 b/d (3,000 b/d net to Dana). Total development costs are expected to be around £31 million (£8 million net to Dana), equivalent to £3 per barrel.
In addition to the Caledonia field, the following interests are to be assigned to Dana by Conoco:
- an 11% interest in Enterprise operated Block 16/13a which is located to the south-east of the Miller and Brae field complex. The block contains the Enoch oil field and J1 gas-condensate field as well as remaining exploration prospects of Jurassic age. Probable reserves from the two fields are estimated to be 10.4 million barrels of oil and 67 billion cubic feet of gas (2.4 million barrels of oil equivalent net to Dana). The 16/13a partners are currently reviewing exploration potential and evaluating development options for both fields with a view to commencing development activity towards the end of 2002.
- a 25% interest in the Cavendish gas field which is located in Block 43/19a in the southern North Sea to the North of the producing Trent gas field and ETS gas pipeline system. The field was discovered in 1989 and tested 48 mmscf/d of high quality gas. Probable reserves have been estimated by the operator to be 104 bcf (26 bcf or 4.4 million barrels of oil equivalent net to Dana). The operator, Highland Energy, is currently evaluating development options for the Cavendish field with a view to commencing development activity in 2003.
- Interests of approximately 20% in each of exploration Blocks 21/12, 21/13a, 21/11a, and 21/16a surrounding Dana's existing interests in the Goosander, Durward and Dauntless oil fields. This will increase Dana's overall interest in this strategically important area of the Central North Sea to an average of approximately 50%.
CONSIDERATION
Dana is assigning to Conoco a 5% interest in Block 44/24a, which includes a 3.05% unitised interest in the UK portion of the 'Orca' and 'Beta' gas discoveries. A development of the Orca and Beta fields is expected to be undertaken with the owners of the adjacent Dutch sector blocks D15 and D18, into which the fields extend, following further appraisal drilling and the completion of unitisation discussions across the UK-Netherlands median line. First production is anticipated in 2004 or 2005 dependent on progress. Probable combined field reserves on the UK side of the median line are estimated by the operator to be 265 billion cubic feet (8.1 billion cubic feet or 1.3 million barrels of oil equivalent net to Dana). This asset has a value on Dana's balance sheet of £2.8 million.
Upon completion, the Group will also make a payment to Conoco of $2.5 million (£1.7 million) in cash. Two further conditional payments, each of $2.5 million, will be made by Dana, the first upon production of first oil from the Caledonia field and the second upon 5 million barrels of oil being produced and sold from the Caledonia field.
COMPLETION
The completion of the acquisition is subject, inter alia, to the consent of the DTI and the formal approval of the other partners in the various fields. It is expected that such approvals will be received by 31st January 2002.
Tom Cross, Dana's Chief Executive commented:
"This deal is in line with Dana's strategy of turning its exploration discoveries into significant production opportunities. The transaction will boost Dana's production in 2002 and materially enhance our UK asset base, adding over 8 million barrels of oil and gas reserves at an extremely attractive price of less than a dollar per barrel. Furthermore, we have managed to defer the majority of the acquisition costs until production from Caledonia starts and cash flow is guaranteed. In addition to Caledonia, we expect to be able to develop the Enoch, J1 and Cavendish fields sequentially over the next few years and hence deliver increasing North Sea production."
|
For further information, please contact: |
|
| Tom Cross, Chief Executive | Tel: 01224 652400 |
| Dana Petroleum plc | |
| Andy Bostock, Technical Director | Tel: 01224 652400 |
| Dana Petroleum plc | |
| Archie Berens | Tel: 020 7457 2020 |
| College Hill Associates | |
