Shares in Aberdeen oil and gas firm Dana Petroleum hit new highs yesterday after it announced another discovery in the UK northern North Sea.
The East Rinnes oil find comes less than a month after the discovery of the nearby West Rinnes oil accumulation.
Both are near to the Dana-operated Hudson producing oil field and the company’s undeveloped Melville field.
Tom Cross, Dana’s chief executive, said: “Finding a second oil field in the Rinnes area is an important and valuable result for Dana.
“The West Rinnes and East Rinnes discoveries should lead to a substantial new oil development in this part of the North Sea and significantly increase the probability of success for a number of Dana’s other prospects in the immediate vicinity, such as West Hudson, North Melville and South West Rinnes.”
Dana shares jumped by more than 6% yesterday morning before finishing the day up about 5.8% at £18.83.
The company now has a market capitalisation of more than £1.5billion.
Dana said initial analysis indicated that East Rinnes oil was similar to the high-quality crude discovered at West Rinnes and to that being produced at Hudson.
It added: “Given the similarity in reservoir quality and oil characteristics to West Rinnes, which flowed at an equipment restricted rate of 7,800 barrels per day, the East Rinnes well is not being drill-stem tested as the company has already gathered sufficient data to fully evaluate the discovery.”
Dana said the next step was to integrate all the log, pressure, test and fluid data collected from the West Rinnes and East Rinnes wells.
The Aberdeen company’s technical team will then reinterpret the seismic data utilising this new well information and remap the two structures to determine the volumes of oil discovered in this area so far and to examine the additional prospects for drilling.
Dana said that, as part of this process, development options for the West Rinnes, East Rinnes and Melville oil fields would be evaluated and optimised.
Mr Cross said options would include a standalone vessel development or even possibly a platform.
The company was founded in 1994 by Mr Cross and a small group of investors with less than £300,000 of initial seed capital. It joined the Stock Exchange in 1996 and, at the end of 2006, Dana had grown to have a market value of more than £1billion.
The firm has a 7.5% interest in the undeveloped Topaz gas field, which was discovered in 1987.
Production is expected to start in early 2009 and continue until 2017.
Graham Stewart, chief executive of Faroe, said: “We acquired this asset as part of a cross-border swap transaction with E.ON Ruhrgas in November last year, since when the outlook for gas prices has continued to improve.
“Production from Topaz will enhance our gas production portfolio and therefore strengthen the business as a whole, creating further value for our shareholders through our balanced portfolio of production, appraisal and exploration assets.”
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