The Caledonia oil field, located in Block 16/26 immediately to the North of the Britannia field, is operated by Chevron and was discovered in 1993. Proven and probable reserves have been estimated by the operator to be 10.3 million barrels (2.6 million barrels net to Dana's 25.8% interest). Up to a further 6 million barrels of possible reserves will be the target of an appraisal well to be drilled in 2002 as the first step in the field development. First oil is anticipated in October 2002 at initial production rates of 12,000 b/d (3,000 b/d net to Dana). Total development costs are expected to be around £31 million (£8 million net to Dana), equivalent to £3 per barrel.
In addition to the Caledonia field, the following interests are to be assigned to Dana by Conoco:
Dana is assigning to Conoco a 5% interest in Block 44/24a, which includes a 3.05% unitised interest in the UK portion of the 'Orca' and 'Beta' gas discoveries. A development of the Orca and Beta fields is expected to be undertaken with the owners of the adjacent Dutch sector blocks D15 and D18, into which the fields extend, following further appraisal drilling and the completion of unitisation discussions across the UK-Netherlands median line. First production is anticipated in 2004 or 2005 dependent on progress. Probable combined field reserves on the UK side of the median line are estimated by the operator to be 265 billion cubic feet (8.1 billion cubic feet or 1.3 million barrels of oil equivalent net to Dana). This asset has a value on Dana's balance sheet of £2.8 million.
Upon completion, the Group will also make a payment to Conoco of $2.5 million (£1.7 million) in cash. Two further conditional payments, each of $2.5 million, will be made by Dana, the first upon production of first oil from the Caledonia field and the second upon 5 million barrels of oil being produced and sold from the Caledonia field.
The completion of the acquisition is subject, inter alia, to the consent of the DTI and the formal approval of the other partners in the various fields. It is expected that such approvals will be received by 31st January 2002.
Tom Cross, Dana's Chief Executive, commented: 'This deal is in line with Dana's strategy of turning its exploration discoveries into significant production opportunities. The transaction will boost Dana's production in 2002 and materially enhance our UK asset base, adding over 8 million barrels of oil and gas reserves at an extremely attractive price of less than a dollar per barrel. Furthermore, we have managed to defer the majority of the acquisition costs until production from Caledonia starts and cash flow is guaranteed. In addition to Caledonia, we expect to be able to develop the Enoch, J1 and Cavendish fields sequentially over the next few years and hence deliver increasing North Sea production.'
Most Popular Articles