Dana Petroleum reported that at its Annual General Meeting held earlier today, all resolutions were approved by shareholders.
Commenting on the substantial progress and activities of the Company, the Board of Directors released the following statement:
"2007 was another excellent year for Dana, continuing its successful track record of year-on-year growth. The highlights of 2007 included the completion of two major acquisitions in Egypt and Norway, an outstanding reserves replacement ratio of 316%, record oil and gas production growth and very strong financial results.
"Already in 2008, there have been significant oil discoveries at West Rinnes and East Rinnes and an important gas discovery at West El Burullus. The Company has stepped up a gear in terms of the number of exploration wells being drilled whilst remaining focused on building the breadth and quality of its exploration portfolio. Delivery of the extensive exploration program will continue at the current rate through the rest of 2008 and 2009.
The Company now produces oil and gas from 30 fields across 4 countries; the UK, Egypt, Norway and the Netherlands, and it is currently exploring for oil and gas in 11 countries across Europe and Africa.
2007 average daily oil and gas production grew by 37% to 30,514 boepd (2006: 22,285 boepd). With an average realized price of $56.03 per boe during 2007 (2006: $48.78 per boe), revenue for the year increased by 45% to £311.5 million (2006: £215.3 million).
Average production for the first half of 2008 was approximately 43,200 barrels per day oil equivalent. Dana’s most recent developments, the Cavendish and Enoch fields which were brought onstream in 2007, have delivered strong production. There was also excellent performance during this period from the Egyptian fields, including production from the C1 well on East Zeit and the newly drilled South-West Qarun-12 well.
Good progress is being made on drilling in the East Zeit field, offshore Gulf of Suez, with the current development well expected to reach the primary reservoir section in the coming weeks. The Company is working up opportunities and options for an extensive long term work program on the East Zeit field to enhance production. There is also an active development program in each of Dana’s non-operated production concessions in Egypt which provide upside from low cost developments.
Group production for the 2008 full year is expected to be in the 40-45,000 boepd range as previously indicated. The actual out-turn production average will be determined by existing field performance and uptime and the UK gas price, which affects the economics of gas production and therefore export nominations and production levels. The Company remains un-hedged with respect to its oil and gas sales and hence is gaining the full benefit from ongoing strong commodity prices.
In 2007, two new fields, namely Enoch and Cavendish, were brought onstream and the Company has already committed to three new field developments in the first half of 2008:
Dana, as Operator, continues to drive forward the joint Barbara/Phyllis gas field development in UK Central North Sea. Engineering studies focused on host platform selection are progressing well with project sanction expected in the first half of 2009.
Exploration and Appraisal
In 2007, the Company drilled discoveries at Storskrymten in Norway, E18-7 in the Netherlands and Kerloch in the UK in addition to successful appraisal of the Grouse discovery in the UK. The Company has already drilled a number of wells in 2008, with significant discoveries at West Rinnes and East Rinnes in the UK and at West El Burullus, offshore Egypt.
Dana will be participating in a further eleven wells during the second half of 2008, one well each in the UK, Norway and Morocco and eight wells in Egypt, where most of these wells are relatively low cost onshore wells which, in the case of success, can be brought on stream very quickly. Notable operated wells include the South-East July well in the Gulf of Suez, Egypt which Dana acquired earlier in 2008, the Akhenaton prospect in the South October concession in the Gulf of Suez, and a large prospect in the Dana operated Bouanane concession, onshore Morocco. Rigs are secured for the planned drilling program in 2008.
Following the exploration successes in the first half of 2008, the Company has committed to further drilling in the Rinnes area by securing the Stena Spey rig to drill South-East Rinnes in late 2008 and the Byford Dolpin rig to drill South-West Rinnes in early 2009. A rig has also been secured to drill two further wells in West El Burullus in 2009 with further drilling planned in 2010. In total Dana expects to drill between fifteen and twenty wells in 2009 with other notable targets being the Tornado prospect in the UK West of Shetland area, the Eitri prospect in the Jotun area in Norway, the Trolla well in Norway and a second well in the South October concession in Egypt. Rigs have been secured for these key 2009 activities.
The Company was awarded 7 blocks across 3 licenses in Norway in January 2008, and is already committed to drilling the Trolla prospect in 2009. Dana is currently acquiring seismic in a second recently awarded license in the Norwegian North Sea. The transaction with Det Norske, announced in June 2008, added a new well in late 2008 on the Fulla prospect. Dana pre-qualified as operator in Norway early in 2008 and this enhanced status should allow access to further opportunities.
The Company has also recently bid for a significant number of blocks in the UK 25th Offshore Round with results expected to be announced later in 2008.
Production growth and strong commodity prices have allowed a further US$75 million of bank debt to be repaid in the first half of 2008. At 30 June 2008, net debt stood at approximately £10 million, a reduction of some £61 million from the 2007 year end. The Company has planned 2008 capital investment of approximately £200 million across existing fields and licenses.
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