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Dana starts drilling at high-stakes Africa wells

ALASTAIR REED


DANA Petroleum shares jumped another 2 per cent yesterday after the Aberdeen-based oil and gas firm said drilling had begun at the first of a number of "high-risk but potentially transforming" wells in Africa.

The group's stock gained 18.5p to reach 890p, not far off an all-time high of 915p, to give Dana a market cap of £736 million.


ABN Amro analyst Finlay Thompson described initiation of drilling on the Faucon-1 well in Mauritania as "good news", and pointed out that if the well proves successful it could be worth "around £3 a share".

However, he warned that the chances of success were only about one in ten. "The shares shouldn't come under significant pressure if the well proves dry, as Gaz de France is paying for Dana's exploration costs," he said.

According to Dana, whose partners in the project include Gaz de France and Tullow Oil, the prospect could contain "over one billion barrels of oil". The company also said that a 2,150sq km 3D seismic survey had recently begun on the North-West Safi exploration licence area off the coast of Morocco. The group expects to start drilling in 2007.