dana shares surge after news of big offshore find

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DANA SHARES SURGE AFTER NEWS OF BIG OFFSHORE FIND

DAVID TELFER

09:00 - 07 December 2005

Shares in Aberdeen-based Dana Petroleum soared yesterday after it said it had found hydrocarbons with its Faucon-1 exploration well off Mauritania, west Africa.

The oil and gas company's shares climbed to a high of £10.10 before settling up 82p or more than 9% at 973p.

This values Dana at more than £800million, and puts it well inside Scotland's top 20 firms by market capitalisation.

Dana said its first well in block 1 had found hydrocarbons in its main target zone, and drilling had been suspended temporarily while a full suite of wireline logs, formation pressures, fluid samples and core samples was obtained.

The company said it intended to deepen the well further to fully explore the target and it would make another announcement in due course - including on the likely size of the discovery - once all the data had been evaluated.

Dana has already said the Faucon prospect, in which it has a 36% stake and is operator, has been mapped by 3D seismic data as having as much as 1billion barrels of oil in place.

It said earlier it was the first of a number of higher-risk but potentially company-transforming wells it intended to drill on its Mauritanian acreage over the next few years. Dana's Petrel prospect, also off Mauritania in the same area as Faucon, is another where 3D seismic suggests over 1billion barrels of oil could be in place.

Chief executive Tom Cross said Dana had already made a significant discovery on its Pelican prospect in the north of the same block and now Faucon in the south. He said this opened up a lot of prospects in between, while Dana also had stakes in block 2 further north off Mauritania and offshore Senegal to the south; with each block equivalent in size to more than 50 North Sea blocks.

Mr Cross added that Dana was saying it had found hydrocarbons at this stage rather than oil or gas, but most finds off Mauritania to date had encountered light oil with gas on top - an optimum position for producing oil.

He said the Faucon-1 well would drill on, starting today and results should be known in a week or two. Targets both in the Faucon prospect and Petrel were identified by electromagnetic surveys carried out by Aberdeen-based Offshore Hydrocarbon Mapping.

Mr Cross said: "We got positive results at both. Petrel now looks very attractive and we'll aim to get a rig as soon as possible to drill it."

A partner in Faucon is Gaz de France with 24%, following a recent swap of assets with Dana. The deal also saw the French company agree to "free carry" Dana on drilling three wells offshore Mauritania up to costs of about £17.5million.

Other partners are Tullow Oil with 20%, Hardman Resources 18%, and minnow Roc Oil 2%.

Australia-based Hardman said yesterday the discovery indicated the area might contain more oil than had previously been thought.

Dana is also close to completing an exploration well on its 79%-owned Clachnaben prospect in the northern North Sea, and initial results should be known about the same time as results from Faucon-1.

Tullow Oil said yesterday it was suspending its Costisa 1Z well in Romania after failing to find hydrocarbons and was transferring the licence to Europa Oil and Gas.

It added, however, that drilling operations on prospects in Angola, Uganda and Gabon were progressing.

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