Dana Petroleum has announced solid results for 2012 as it continues to invest in long-term production growth.
Marcus Richards, Group Chief Executive commented: “2012 was another year of solid progress for Dana with strong revenues and production underpinned by a diverse asset base.
“We were granted sanction for the Western Isles Development Project in the UK North Sea at the end of the year. This project is extremely important for Dana as we aim to significantly boost our production over the next five years. We continue to invest in long-term growth.
“Safety is a core value at Dana and we took a decision to shut down production in a number of locations so we could carry out safety and operational integrity work. We were able to maintain production for the year as a whole while carrying out this work.
“Our priorities remain the same as last year: to deliver value for our shareholder, the Korea National Oil Corporation (KNOC) by maintaining safe, reliable and profitable operations and to deliver production growth.
“We have built solid foundations to grow our business in a sustainable, long-term way and to become a leading international oil and gas company operating in Europe, Africa and the Middle East.”
At the end of 2012, we announced that the Department of Energy and Climate Change had approved Dana as the operator of the Western Isles development project, a joint venture between Dana with an equity share of 77%, and Japanese upstream exploration and production company Cieco, which holds the remaining 23%.
The Western Isles project is at the heart of Dana’s growth strategy. Unlocking the potential of these new fields is a significant milestone as we aim to significantly grow our production.
The project will develop two discovered oil fields called Harris and Barra in the Northern North Sea, 160km east of the Shetlands and 12km west of the Tern field. The nine-well development is expected to produce more than 40,000 barrels of oil equivalent, adding more than 30,000 barrels (net) to Dana’s daily production when it comes on-stream in 2015.
In June 2012, Dana was awarded a production sharing contract (PSC) for the Bakassi West block in Cameroon. Dana will be the Operator (55%), working in partnership with Madison Cameroon Oil and Gas Limited (“Madison”) (35%) and SoftRock Oil and Gas Limited (“SoftRock”) (10%).
The initial exploration work programme will last four years with the acquisition, processing and interpretation of 250km of 2D seismic data, and the drilling of two exploration wells - the second well contingent on the results of the first.
Depending on the results obtained during the first period, this programme could be extended to two further periods of two years each.
On 1 October 2012, Dana assumed operatorship of the Triton floating production storage and offloading vessel (FPSO) from Hess. Also completed on 1 October 2012 was the acquisition of an additional 28.28% stake in the Bittern field, again from Hess, taking our interest in the field up to 33%.
Our goal is to continue to grow production significantly.
Our overall production fell slightly to 57,284 boepd in 2012 from 57,616 boepd in 2011. This reflects some of the challenges encountered in our non-operated portfolio during the year including the loss of a full year’s production from the Banff, Kyle and Enoch fields due to on-going shutdowns and extended operational shutdowns in the Greater Guillemot Area.
These have been offset by a full year of production from the assets acquired from Petro-Canada UK in March 2011 and the North Zeit Bay PSC in Egypt. In addition the Medway development in the Netherlands came on-stream in Q1 2012 and our interest in the Bittern field increased from 1 October 2012.
The most significant contributions in terms of production are associated with participation in the fields of Greater Kittiwake area (GKA), Greater Guillemot area (GGA), Babbage, Cavendish, Captain, Hudson, Ettrick, Jotun, East Zeit, Hanze and De Ruyter.
In total, 22 production related wells were drilled during the year (16 production and 6 injection/disposal). The most significant successes in this programme were:
A substantial and balanced portfolio of drilling for new reserves continues to be central to Dana’s business model. This programme has been achieved by applying extensively for licenses in government bid rounds as well as undertaking commercial transactions and asset trades to leverage into additional drilling opportunities.
Dana embarked on an active drilling programme in 2012 with a total of 19 exploration and appraisal wells completed in the year. This resulted in the following most significant discoveries:
Of the remaining wells drilled in the year, there were unsuccessful exploration wells at Cragganmore in the UK, Sabu-1 in Guinea, Størebjorn, Clapton and Geite in Norway and A23, WON A-1x and Fin-03x in Egypt.
In Mauritania, following the positive results obtained by the Cormoran-1 well in late 2010, an extension to the Block 7 PSC was agreed and preparations made to drill an exploration well in 2013. This well, Fregate-1, will be drilled as part of a multi-well programme with Tullow. It will test the hydrocarbon potential at a number of stratigraphic levels, including those which contained gas in the Pelican-1 and Cormoran-1 wells. The Fregate-1 well is expected to spud in mid-2013.
In Guinea, SCS, the Operator, agreed to farm-down, transferring a 40% interest in the PSC to Tullow, who will become the new Operator. Revised equities are Tullow (40%, Operator), SCS (37%) and Dana (23%). The large 3D survey acquired in 2011 to pursue discoveries in the area is being processed.
We also continued to build our exploration portfolio through licence round applications and commercial transactions throughout the year and will continue to do so in future years.
During 2012, we made significant progress on a number of developments in the UK, Netherlands and Egypt.
Most notably, Dana, as operator, received UK Government approval of the Western Isles development in the UK Northern North Sea. We are playing our part in helping to secure the UK’s future energy needs while adding significant production and reserves to our portfolio. The project is progressing on schedule and first oil is expect to come online in 2015 adding significantly to Dana’s UK production.
We also brought new wells into production in Egypt, through our Joint Venture company Zeitco, and were successful in the 2011 Egyptian General Petroleum Company (EGPC) bidding process.
We are committed to Egypt and will continue to build production and reserves in the country, while developing relationships with EGPC and other partners, which will identify further growth opportunities.
On the back of a successful exploration and development programme in 2011, first oil from the Matr-1xST well was achieved through the Lorcan Processing Facility in North Zeit Bay (NZB), Egypt, in January 2012. In addition, following discoveries early in 2012 and a fast track development programme, first oil was produced from the East Matr-1X and the North Matr-1X wells. NZB is operated through Petro Kareem, a joint venture between Dana and EGPC.
The Medway project in the Netherlands developed the Van Nes gas discovery and the Van Ghent oil and gas discovery. This integrated oil and gas project utilises the existing De Ruyter facilities. Project sanction was given at the end of 2010 and Phase 1 of the project culminated with first oil from the Van Ghent field produced on 11 January 2012. Phase 2 of the project was completed in April 2012 when first gas from the Van Nes field was produced. The Medway infrastructure has been designed to accommodate the tie-in of future fields.
For further information contact:
Director of Group Communications and External Affairs
+ 44 (0)1224 616100
Group Corporate Communications Manager
+ 44 (0)1224 616100
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