Press Release

30 August 2001

DANA PETROLEUM PLC
("Dana" or "the company")

PLACING AND OPEN OFFER

Dana Petroleum plc, a British independent oil and gas exploration and production company, is pleased to announce that it is raising £25.5 million (£24.0 million net of expenses) by way of a placing and open offer and a cash placing.

Highlights


Tom Cross, Chief Executive, commented:

"Dana's team has achieved outstanding drilling success with 8 oil and gas discoveries from its last 10 exploration wells. In addition, we have delivered 5 successive years of growth in oil production and reserves. This financing will enable the Company to appraise its recent discoveries and thereby maximise the ultimate return to shareholders. Dana is now well positioned with an exciting portfolio and the means to build upon its strong track record."

 

For further information, please contact:

 
 

Tom Cross, Chief Executive

 Dana Petroleum plc Tel: 01224 652400
 
Derek Rawlings Investec Henderson Crosthwaite Tel: 020 7597 5970
 
Archie Berens College Hill Associates Tel: 020 7457 2020

 

The Placing and Open Offer

The Company is proposing to raise approximately £20.0 million gross by the issue of 163,338,224 New Shares pursuant to the Placing and Open Offer. Investec Henderson Crosthwaite has conditionally agreed to place these New Shares subject to clawback to satisfy valid applications by Qualifying Shareholders under the Open Offer other than in relation to Open Offer Shares for which irrevocable commitments not to take up under the Open Offer have been received. Teather & Greenwood are stockbrokers to the Issue.

Qualifying Shareholders will be given the opportunity to subscribe under the Open Offer for Open Offer Shares at the Issue Price, free of expenses, pro-rata to their existing shareholdings on the basis of

2 New Shares for every 11 Ordinary Shares

held on the Record Date and so in proportion for any greater number of Ordinary Shares held.

Entitlements of Qualifying Shareholders will be scaled down to the nearest whole number of New Shares and fractional entitlements will not be allocated under the Open Offer but will be aggregated and placed for the benefit of the Company. The maximum entitlement of each Qualifying Shareholder will be indicated on the Application Form which will accompany the prospectus. Each Application Form will be personal to Shareholders and may only be transferred to satisfy bona fide market claims.

The Placing and Open Offer has been fully underwritten by Investec, subject to certain conditions.

An irrevocable undertaking has been obtained from Innogy Holdings plc not to take up its entitlement under the Open Offer of 14,720,916 Open Offer Shares. Such Open Offer Shares will be placed by Investec Henderson Crosthwaite on a firm basis.

We should also state that Innogy's shares have been placed out.

The Cash Placing

The Company is also proposing to raise approximately £5.5 million before expenses by the issue of 44,897,959 New Shares at the Issue Price pursuant to the Cash Placing.

The Cash Placing has been fully underwritten by Investec, subject to certain conditions. The New Shares, the subject of the Cash Placing, will be placed by Investec Henderson Crosthwaite on a firm basis with institutional and other investors. Teather & Greenwood are stockbrokers to the Cash Placing. Members of the public are not eligible to take part in the Cash Placing.

New Shares

The New Shares will, when allotted and fully paid, rank pari passu in all respects with the Ordinary Shares. The New Shares will be created and issued by virtue of the existing resolutions, authorities and approvals held by the Company.

It is expected that Admission will take place and that dealings will commence in the New Shares on 27 September 2001. Share certificates in respect of New Shares to be held in certificated form are expected to be despatched by no later than 4 October 2001. New Shares to be held in uncertificated form are expected to be delivered into CREST no later than 27 September 2001.

Reasons for the Issue and use of proceeds

During the last three years, the Group has significantly improved its asset portfolio and growth prospects. Since 1998, Dana has achieved considerable exploration success with eight oil and gas discoveries resulting from its last 10 exploration wells and is currently assessing their commercial viability. The Directors now wish to ensure that the Group is well placed to maximise returns from these discoveries.

Although the Group has sufficient finance in place to meet its share of the financial obligations of its existing interests, in order for the Group to appraise and initiate development of some of its recent discoveries it would, in the absence of further funding, have to divest part of these assets or involve new third parties in the development. In order to maximise the returns to Shareholders on its assets, the Directors believe that the Group would benefit significantly from raising additional finance and thereby reduce the need to dilute its interests primarily through farm-outs, save for purposes of risk management. The Directors have therefore decided to proceed with the Issue.

The net proceeds of the Issue (approximately £24.0 million) will be used to:

The Board also believes that the Issue will enable Dana to retain as great a proportion of its exploration assets as is prudent, in order for the Group to benefit from exploration success whilst seeking to protect against exploration uncertainties by farming out higher-risk projects where appropriate.

The Board frequently reviews opportunities for Dana to improve its asset portfolio, either through acquiring assets from, or exchanging assets with, third parties. To the extent that Dana's asset portfolio changes following the Issue as a result of such transactions, the Board will review the application of the Issue proceeds in relation to the Group's revised portfolio.

Current Trading and Prospects

For the year ended 31 December 2000, the Group reported a pre-tax profit of £7.4 million (1999: £6.4 million) on turnover of £29.9 million (1999: £20.7 million) despite having made an impairment provision of £3.1 million. Since December 2000, Dana's production from its Claymore, Victor and South Vat-Yoganskoye assets has continued at approximately 6,000 boepd in aggregate.

Dana's strong track record of oil and gas discoveries since 1998 has led to consideration of a number of potential developments, most notably in the North Sea and offshore Indonesia. Appraisal of these discoveries is currently in progress and where it is commercially attractive Dana will consider increasing its stake prior to development.

The Directors remain confident about the Group's prospects. The Company expects to announce its interim results at the end of September 2001 and is actively considering a consolidation of the Ordinary Shares.

Prospectus

It is expected that a prospectus will be posted to Shareholders shortly.

Expected Timetable of Principal Events

Record Date for the Open Offer

22 August 2001

   

Latest time and date for splitting Application Forms (to satisfy bona fide market claims only)

3.00 pm on 18 September 2001

   

Latest time and date for receipt of Application Forms and payment in full under the Open Offer

3.00 pm on 20 September 2001

   

Admission and commencement of dealings in the New Shares on the London Stock Exchange

8.00 am on 27 September 2001

   

Date of delivery in CREST of New Shares to be held in uncertificated form

8.00 am on 27 September 2001

   

Definitive share certificates in respect of New Shares, held in certificated form to be despatched by

4 October 2001

Issue Statistics

Number of Ordinary Shares in issue

898,360,233

   

Number of New Shares subject to the Placing and Open Offer (of which 14,720,916 are the subject of an irrevocable undertaking not to subscribe and are being placed firm)

163,338,224

   

Number of New Shares subject to the Cash Placing

44,897,959

   

Number of Ordinary Shares in issue following the Issue

1,106,596,416

   

Market capitalisation at the Issue Price following the Issue

£135.56 million

Definitions

The following definitions apply throughout this announcement, unless the context otherwise requires:

"Admission"

admission of the New Shares to (i) the Official List and (ii) trading on the London Stock Exchange's market for listed securities

   

"Application Form"

the application form relating to the Open Offer being sent to Qualifying Shareholders with the prospectus

   

"boepd"

barrels of oil equivalent per day

   

"Cash Placing"

the firm placing by Investec Henderson Crosthwaite of 44,897,959 New Shares at the Issue Price

   

"Conditional Placing Shares"

the New Shares other than the New Shares to be placed firm by Investec with placees upon the terms of the Placing Agreement

   

"CREST"

the relevant system (as defined in the Uncertificated Securities Regulations 1995 (SE 1995 No. 95/3272)) in respect of which CRESTCo Limited is the Operator (as defined in such regulations)

   

"Dana" or the "Company"

Dana Petroleum plc

   

"Dana Group" or "Group"

Dana and its subsidiaries or associates

   

"Directors" or "Board"

the directors of Dana

   

"Investec"

Investec Bank (UK) Limited

   

"Investec Henderson Crosthwaite"

Investec Henderson Crosthwaite, a division of Investec

   

"Issue"

the Placing and Open Offer and the Cash Placing

   

"Issue Price"

12.25p per New Share

   

"London Stock Exchange"

London Stock Exchange plc

   

"New Shares"

the 208,236,183 new ordinary shares of 1p each that are the subject of the Issue

   

"Open Offer"

the conditional invitation made by Investec Henderson Crosthwaite, acting as agent for the Company, to Qualifying Shareholders to subscribe for the Open Offer Shares at the Issue Price

   

"Open Offer Shares"

the 163,338,224 New Shares that are the subject of the Open Offer

   

"Ordinary Shares" or "Existing Shares"

ordinary shares of 1p each in the capital of Dana)

   

"Placing"

the placing by Investec Henderson Crosthwaite of the New Shares at the Issue Price

   

"Placing and Open Offer"

the placing of the Conditional Placing Shares pursuant to the Placing Agreement and the right of Qualifying Shareholders to apply for the Open Offer Shares under the Open Offer

   

"Qualifying Shareholders"

holders of Ordinary Shares on the Company's register on the Record Date (except for certain overseas shareholders)

   

"Record Date"

the close of business on 22 August 2001

   

"Shareholders"

holders of Ordinary Shares in the Company

   

"Teather & Greenwood"

Teather & Greenwood Limited

   

"UKLA" or "UK Listing Authority"

the Financial Services Authority Limited in its capacity as the competent authority for the purposes of Part IV of the Financial Services Act 1986

   

"United Kingdom" or "UK"

the United Kingdom of Great Britain and Northern Ireland

   

Investec Henderson Crosthwaite, a division of Investec Bank (UK) Limited, which is regulated by The Securities and Futures Authority Limited, is acting for Dana Petroleum plc in relation to the Placing and Open Offer and the Cash Placing and is not acting for any other person other than Dana Petroleum plc and it will not be responsible to any other person for providing the protections afforded to customers of Investec Henderson Crosthwaite or for advising on the transactions and arrangements proposed in this announcement.