Korea National Oil Corporation (KNOC) was reported yesterday to be finalising loans required to submit a formal £1.7billion bid for Aberdeen-based oil and gas operator Dana Petroleum.
The loans, understood to be from a group of mostly Asian banks, are required before Korean state-owned KNOC can make a firm offer under UK takeover law.
Dana has said KNOC must give assurances that funds are in place before due diligence can proceed, although it has been holding out for a higher offer.
Investment manager Schroders, which is Dana’s largest shareholder with 13% of the equity, has called on the company’s board to approve the likely £18-a-share offer. Dana’s shares closed yesterday at £17.11.
Meanwhile, Dana said it had discovered a new oil field with its 100%-owned Fin-1X exploration well in the North Zeit Bay production sharing contract (PSC) area onshore in the Gulf of Suez, in Egypt.
This follows the discovery of the Lorcan oil field, also Dana 100%, made last month in the same PSC area. The Fin-1X well encountered good quality oil-bearing sands in line with Dana’s prognosis prior to drilling, the company said.
It said that during testing the well flowed strongly, delivering an average flow rate of 1,049 barrels of oil per day despite being constrained by the testing equipment, and the well had been retained as a future oil producer.
The Aberdeen company said: “The Fin discovery together with Lorcan, which flowed at 4,714 barrels of oil per day, also constrained by the testing equipment, confirms this area will be very attractive to develop.
“We estimate these two discoveries so far in this PSC area have proven up initial reserves of 10-12million barrels of oil (100% Dana) with the potential for considerable upside. Further drilling is planned.
“The full development plan is to tie production back to the East Zeit oil and gas processing plant, which is situated just nine miles to the south-east of the Lorcan and Fin oil fields.
“Dana also holds a 100% interest in East Zeit, making these developments extremely efficient and commercially attractive.”