Dana Petroleum Scoops Up Bow Valley, Additional North Sea Interests

North Sea, Enoch Field
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Ettrick Field - North Sea
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Dana Petroleum has entered into an agreement with Bow Valley Energy Ltd. that provides for the acquisition of Bow Valley by Dana pursuant to a plan of arrangement under the Business Corporations Act (Alberta). Pursuant to the Arrangement Agreement, and subject to certain conditions, including Canadian court approval, approval pursuant to the Investment Canada Act (Canada) and the approval of the shareholders of Bow Valley, Dana will acquire all of the outstanding shares of Bow Valley for a cash consideration of $0.50 per share representing an aggregate consideration of $219 million (US $177 million), which includes the assumption of an estimated $175 million (US $142 million) of net debt as at December 31, 2008.

The offer price represents a premium of approximately 70% over Bow Valley's closing share price of $0.295 per share on February 13, 2009 and a premium of 53% to the 20-day volume weighted average trading price of Bow Valley for the period ended February 13, 2009.

Tom Cross, Chief Executive Officer of Dana commented, "The acquisition of Bow Valley is directly in line with Dana's successful strategy of growing reserves and production in its core operating areas through both exploration and acquisition. Dana already has a working knowledge of the North Sea assets of Bow Valley which form a close fit with Dana's existing North Sea portfolio. For example, both companies hold interests in the Enoch oil field and Bow Valley's Kyle oil field is tied back to Dana's Banff oil field."

Transaction Highlights

  • Bow Valley currently has four oil fields producing in the UK, namely Blane, Chestnut, Enoch and Kyle, with a fifth, Ettrick, due to come on-stream within the next three months.
  • Once Ettrick is on-stream, Dana expects the acquisition of Bow Valley to add approximately 7,800 barrels of oil equivalent (“boe”) per day (“boepd”) of production to the Dana portfolio, representing an approximate 20% increase over Dana's average production in 2008 of 39,400 boepd.
  • Following completion of the transaction, Dana's total number of producing fields will increase to 35.
  • Bow Valley's production is predominantly oil, with over 80% liquids and less than 20% gas. This is similar in balance to Dana's existing production which in 2008 was 74% liquids and 26% gas.
  • Dana estimates this transaction will increase its proven and probable (“2P”) reserves by approximately 11.3 million boe (as at 1 December 2008).
  • Bow Valley's assets have relatively low operating costs, in line with Dana's operations, and are expected to generate strong cash flows, even in today's commodity price environment.
  • The assets are predominantly producing and therefore only limited additional capital investment is required and only relatively modest abandonment commitments are attached to these fields.
  • Bow Valley's existing license portfolio includes a number of exploration and appraisal opportunities. These will be further analyzed by Dana's experienced North Sea team and could lead to additional prospectivity.
  • Dana is currently drilling eight exploration wells across the North Sea and North Africa with a total of 17 wells scheduled for this year.
  • At the end of 2008 Bow Valley had approximately £154 million of UK tax losses which will be available to Dana and which the Company believes will significantly benefit the enlarged Dana group going forward.
  • Based on current estimates of the anticipated benefits of the above tax losses to Dana, the net acquisition cost to Dana is approximately US $9.47 per barrel.
  • · The transaction is expected to be accretive to Dana in terms of cash flow from year one.



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