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Dana says latest North Sea deal bolsters its defence

Dana says latest North Sea  deal bolsters its defence
Dana Petroleum said yesterday its shares were potentially worth more than £30 each as it stiffened its defences against a hostile £1.67billion takeover bid by South Korea's national oil company, KNOC.

Dana Petroleum said yesterday its shares were potentially worth more than £30 each as it stiffened its defences against a hostile £1.67billion takeover bid by South Korea’s national oil company, KNOC.

The Aberdeen oil company unveiled the findings of an independent valuation, which it said supported its case that the unsolicited offer of £18 a share from KNOC fell well short of its true worth.

Dana also announced the acquisition of North Sea assets from Petro-Canada UK – a wholly owned subsidiary of Suncor – for £240million, saying the move further strengthened its hand in the takeover tussle.

Dana said independent experts it hired had said the firm’s shares were worth £21.20-£24.65 based on existing assets and more than £30 when exploration prospects were factored in.

Chief executive Tom Cross said the figures took into account details of more than 100 licences in the North Sea and Egypt which had not been made public previously and to which KNOC had not had access.

Mr Cross would not say what level of offer would be acceptable to Dana’s bosses, but added they wanted to have a proper value discussion with KNOC.

Dana said it was acquiring interests in fields operated by Petro-Canada UK in the Triton area of the central North Sea, the Nexen-operated Scott/Telford Moray Firth fields and an inner Moray Firth exploration portfolio.

Mr Cross said: “With this deal, Dana becomes a stronger business, increasing our OECD (Organisation for Economic Co-operation and Development) oil production and cash flow significantly.

“By year-end 2010, our total daily production will have risen to around 70,000 boepd (barrels of oil equivalent per day), which is nearly double the production rate at the start of the year.”

Last month, state-controlled KNOC made its offer direct to Dana’s shareholders after failing to convince the management to recommend the bid. Sources close to KNOC said yesterday it had no plans to raise its offer in light of Dana’s statement.

The Korean group can now snap up Dana shares on the open market as a result of the Aberdeen firm announcing the Petro-Canada UK deal. KNOC was previously barred from buying up stock because it was privy to inside information about Dana’s plans.

Analyst Richard Griffith at Evolution Securities said: “KNOC may choose to raise its price modestly . . . to push its holding over the 50% threshold.”

KNOC, which has been given a £4billion-plus war chest to compete with other Asian companies looking to secure supplies for their growing economies, said recently it had support for its offer from investors holding 49% of all Dana shares. Shares in Dana closed up a penny at £18.09.

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