Brokers' Views: Gall & Eke

Gall & Eke highlights North Sea-focused oil and gas producer and developer Dana Petroleum, which has reported that it is on track with an anticipated 2009 full-year production of around 39,000 barrels per day.

In the last year, Gall & Eke says, Dana has added production streams and exploration licences via acquisitions in Norway and Egypt.

On the production side, Dana drilled its first well in the Tornado prospect (North Sea), where it discovered significant volumes of oil and gas. Results are being analysed and we would expect an update next year as to the commerciality.’

Busy times ahead

Over the next 12 months, ‘Dana should be one of the busiest and most exciting drillers in the sector, with a number of large prospects in the Nile Delta, Egypt and the Faroe Islands scheduled for early 2010 and results from the Egypt-based Papyrus well expected by year-end.

‘2010 will also see the first production from fields in the North Sea and a first full-year production from fields acquired through the recent purchase of Bow Valley.’ The broker also highlights the possibility of bid interest, noting that ‘Dana’s North Sea assets may well be of interest to other European integrated utilities.’

Currently trading at close to its core NAV using an oil price of $75 per barrel, Dana offers exciting exploration upside for free, and a successful couple of exploration years ‘could add 25 per cent upside to the share price’. In summation, Dana is ‘a stock for investors looking to hedge out possible medium-term inflation via a proxy on emerging market growth through its oil price leverage’.