Dana to buy Bow Valley

16/02/2009 Robert Tyerman

North sea and Egypt-focused Dana Petroleum has agreed to buy Toronto-listed Bow Valley Energy in a £126 million deal.

Fully listed Dana, which argues Bow Valley’s North Sea assets complement its own, has agreed to pay C$219 million for the Canadian company, including the assumption of estimated net debt of C$175 million. The price of 50 cents (28p) represents a 70 per cent premium over Bow Valley’s closing price last Friday.

Adding Bow Valley’s assets will augment Dana’s reserves by 11.3 million barrels and up the company’s production by 7,800 barrels of oil equivalent per day, an increase of 20 per cent. Dana argues its net acquisition cost will be US$9.47 a barrel, against a current oil price of $37 a barrel, after taking into account Bow Valley’s estimated UK tax losses of £154million.

Dana shares, which fell from £19.72 to 641.5p between May and November last year before rallying more recently, now trade at £10.19, up 5p this morning, valuing the company at £885 million.

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