Dana details bid defence

08/09/2010 Robert Tyerman

Dana Petroleum says its shares are worth between £22.70p and £24.65p to support its opposition to Korea National Oil Corporation's bid at £18.

The fully-listed company, Britain's largest independent North Sea oil producer with other interests in the Gulf of Suez and elsewhere, has issued a 'value-based defence' against the £1.7 billion Korean offer, pointing out it is in a 'transformational growth' phase, with average daily production expected to rise 80 per cent to 70,000 barrels of oil equivalent by the end of the year.

The Dana defence document says independent expert studies value its assets at £21.20p a share before taking into account the value of UK assets recently acquired for £240 million from Petro Canada and valued by these experts at £368 million. The company cites the independent valuation as putting an upper estimate of £30.53p a share without the Petro Canada UK assets and adds its own drilling programme will target another 600 million barrels of oil equivalent by the end of 2011.

Suggesting Korea National (KNOC) will find it hard to secure assets to meet its own ambitious objective of doubling production and reserves by 2012, Dana says KNOC's offer fails to recognise the value of Dana's management team and track record. Tom Cross, founder and chief executive of Dana, says the board has repeatedly offered to hold a 'proper discussion' with KNOC about these value issues and maintains the Koreans have instead preferred to 'go hostile without access to full information on Dana'.

Highlighted by Growth Company Investor at £10.65p last year, Dana shares now trade at £18.07p. Hold on for now.