Dana Petroleum plc, the independent oil and gas exploration and production company focused on growth through international exploration and the development of production in the North Sea and Egypt, is pleased to report its Interim Management Statement for the period to 19 November 2008.
HIGHLIGHTS
Delivery of Exploration Program:
-
During this reporting period, Dana has continued to explore the East Beni Suef concession, onshore Egypt, and has made 2 oil discoveries, with wells at Gharibon-2x and Tareef-1x. Permitting and tie-in work is already underway to bring these new discoveries onstream in the coming months.
-
The Company is currently drilling two offshore exploration wells. The Akhenaton-1 well, in the South October concession in the Gulf of Suez, Egypt (Dana 65%), is currently at approximately 10,800 feet. Results are expected by mid December, after which the IO3 rig will move to the SE July concession (Dana 40%). The SE July-1 well is expected to spud by the end of the year. The second well, targeting the Fulla prospect in Norway (Dana 10%), has spudded during the last week using the West Alpha rig. Results are expected in 1Q 2009.
-
Following the successful drilling of West and East Rinnes earlier in the year, Dana has secured two slots on the Stena Spey rig for drilling the Rinnes South-West and South-East prospects (Dana 64.8%). The rig is due to arrive in mid December with each well expected to take around 25 to 30 days to complete.
-
In Morocco, site preparation work is underway for the drilling of the significant Tafejjart prospect in the Bouanane concession (Dana 50%), with the rig due on location in February 2009. Dana is also pleased to report that the Pride North America rig has been secured to drill the Anchois prospect in the offshore Tanger-Larache concession (Dana 15%) in early 2009.
-
Dana has contracted the ST-2 rig from 1st December 2008 for two rigs slots in the North Zeit Bay concession (Dana 100%), onshore Gulf of Suez, Egypt, and contract award is imminent for a rig to drill the Qamara-1 prospect in the North Qarun concession (Dana 75%) in the Western Desert, Egypt.
Significant Portfolio Growth:
-
Earlier this month, the Company was awarded 11 licences covering 29 blocks in the UK 25th Round. This is an excellent result, which builds upon Dana’s core producing, development and exploration areas in the UK.
-
Dana has also made extensive applications in the Norwegian 2008 APA Round and the 20th Licencing Round. Awards from these rounds are expected to be announced by the end of Q1 2009.
-
Dana has entered into a farm-in agreement in respect of UKCS Southern North Sea Block 48/1a where Dana will earn a 40% interest. The Company has identified the Platypus exploration prospect and drilling is scheduled for late 2009.
Production:
-
Group production for 2008 is expected to average approximately 39,000 to 40,000 barrels per day oil equivalent, representing a 30% growth over 2007, (2007: 30,514 boepd).
-
Recent production in the UK has been lower than previously anticipated due to a combination of factors. Alongside extended platform shutdowns for UK field maintenance programmes there has been some downtime associated with scale build up in the Mallard well in the Greater Kittiwake Area, compressor problems on Claymore, and facilities work on the host platforms which process production from the Johnston and Hudson fields.
-
Continued strong production from Egypt to some extent offset the downtime in the UK. This followed the successful workover and new well activity at the Dana operated East Zeit Field, completed in August, and continued good performance of the non-operated Egyptian assets. To date in 2008 in Egypt, the Company has completed 30 workovers and drilled 8 development wells, with a further 2 to 3 wells planned by the end of the year.
Development Projects on track:
-
Development of the Grouse oil field (Dana 50%), in the Greater Kittiwake Area of UK Central North Sea, is almost complete with the key outstanding piece of work being the trenching of the production flowline. First oil is expected to flow by January 2009.
-
Development of the Babbage gas field (Dana 40%), in the UK Southern North Sea and the E18 gas field (Dana 5.228%) in the Dutch North Sea are both progressing according to plan with first production scheduled for Q1 2010 and Q3 2009 respectively.
-
Work on the Dana operated Barbara/Phyllis joint gas field project in UK Central North Sea is progressing well with host platform selection now planned for early 2009 and project sanction expected in mid 2009.
-
In addition to new field developments, a number of infill drilling targets have been identified: in the F16 gas field in the Dutch sector, the Cavendish gas field in the UK, the Johnston gas field in the UK, the Otter oil field in the UK and in each of the Egyptian concessions. These will be evaluated and prioritised relative to the rest of the development and exploration programme and considered for funding in 2009 and 2010.
Strong Financial Position:
-
Since the interim results, the Company has re-paid US$75 million and therefore has now fully repaid its bank debt.
-
At the end of October 2008, Dana had a net Group cash position of approximately £31 million equivalent, net of convertible debt.
-
The recent strengthening of the US Dollar has augmented the Company’s strong cash flow. Dana’s un-drawn debt facility of US$400 million matures in 1H 2009 and the Company expects its investment plans for 2009 and beyond will be fully funded from its cash resources along with new bank facilities as appropriate.
Outlook:
-
Group production for 2008 is expected to average approximately 39,000 to 40,000 barrels per day oil equivalent, representing around a 30% growth over 2007, (2007: 30,514 boepd).
-
The 2008 capital investment programme is expected to out-turn at approximately £170-180 million.
-
By the end of 2008, Dana will have completed drilling on 11 exploration wells and be actively drilling a further 2 to 4 wells and also be well advanced in site preparation for the Tafejjart well in Morocco.
-
Looking ahead to 2009, up to 17 exploration wells are scheduled, with rigs for 14 of these already secured. Key wells to highlight for this period will include drilling in the Rinnes area, the Tornado and Anne Marie prospects West of Shetland, the Eitri and Trolla wells in Norway, the SE July and Neferititi (South October) wells in the Gulf of Suez, Egypt and 2 wells in the prolific offshore Nile delta, Egypt.
-
In addition to Dana’s extensive exploration and development programme, highlighted above, the Company will continue to appraise new opportunities where Dana’s technical expertise and financial strength can be deployed to add further value for shareholders.
(Dana Petroleum Press Release)
