In this reporting period, Dana has drilled four exploration prospects and also drilled appraisal sidetrack wells on two of these discoveries (Tornado and Jetta), with results as follows:
Dana is currently drilling the Papyrus exploration well, on the West El Burullus concession, (Dana 50%) offshore Nile Delta, Egypt, targeting gas at a similar horizon to the West El Burullus-1 discovery made in 2008. The well is expected to complete around year end and its key aim is to prove additional gas volumes in this area in order to optimise development planning. An exploration well on the much larger Bamboo prospect, is due to spud following completion of Papyrus, and will target deeper, high pressure gas reservoirs which have the potential to open up significant further prospectivity in the block.
In addition, the Company is drilling two wells, Azhar-E2x and Sohba SW-1x in the East Beni Suef concession, onshore Egypt. These wells are part of an ongoing drilling program which has resulted in three new fields being brought on-stream in the last year.
Following the Fulla gas-condensate discovery earlier in 2009, the partnership group has undertaken subsurface and engineering scoping work to determine the value of the field. Dana is currently considering its options in relation to Fulla, which include divesting the asset prior to significant capital expenditure. The Company expects to receive significant interest in its Fulla interest from gas focused companies.
The Company bid for a number of licenses in the Norwegian 2009 APA round and expects to hear results early in 2010.
Dana signed a Letter of Intent with Hyperdynamics Inc in October in relation to the entire offshore of the Republic of Guinea. Hyperdynamics is currently acquiring further seismic data to determine the appropriate areas to be retained post a compulsory relinquishment at end 2009. Dana’s technical evaluation of the current datasets is very encouraging with respect to the prospectivity of the acreage.
Dana's working interest production for the year to date has averaged approximately 38,200 barrels of oil equivalent per day ("boepd"), with production levels over the past three weeks averaging in excess of 42,000 boepd.
During this reporting period there has continued to be zero nominations from the gas buyer on the Johnston field interest in the Southern North Sea, however nominations have just restarted. On the Ettrick field, individual well performance has been strong but overall field production continues to be constrained by the commissioning of the gas compression system which is taking longer than anticipated. These two effects have been substantially mitigated by a stronger than anticipated performance from the Greater Kittiwake area fields, and in particular Grouse and Goosander.
The Group continues to anticipate a 2009 full year production level of around 39,000 boepd. Key variables on production to the end of 2009 are gas nominations in the UK Southern North Sea and commissioning progress on the Ettrick field.
As part of the 2010 Budget process, a number of infill drilling targets have been identified and are being considered in the Claymore, E18, Cavendish and Johnston fields, and in each of the Egyptian concessions. Workovers are also under consideration in the Otter field in the UK and on East Zeit in Egypt.
Good progress is being made on the three key developments in which Dana is currently participating.
Following the lift-out and installation of the Babbage jacket and topsides facilities in September 2009, work has continued on completion of the hook-up on the platform, well tie-in work and drilling. The project is on schedule for first gas early Q2 2010.
At the Barbara/Phyllis joint gas field development in the UK Central North Sea, the partnership group is finalising commercial terms with the key infrastructure hosts. A preferred host will be selected by end 2009, with project sanction planned for Q3 2010 and first gas Q4 2012.
On the Western Isles Project in the UK Northern North Sea work continues at pace. A preferred development concept will be selected early in 2010, with project sanction planned for Q3 2010 and first oil by Q4 2012.
Dana's overall 2009 capital investment program continues to be estimated in the range £240 to £255 million.
The Dana group has a three year, $400 million corporate debt facility agreed with Bank of Scotland and a syndicate of seven other banks. The Company has to date drawn down approximately $141 million under this facility and currently has cash resources of approximately $97 million within working capital, resulting in net bank indebtedness of approximately $44 million.
Together with the Group’s convertible debt, which may become payable in 2012, the Dana group has total net debt of approximately £145 million.
The Group is currently undertaking its annual budget and three year planning process. The Company is well financed and is in a strong position to rank and optimise the opportunities it is pursuing.
In 2009, Dana now expects to drill a total of 18 exploration wells. The exploration program for 2010 will be refined over the coming weeks and will reflect rig availability and discussions with co-venturers. Key wells already scheduled for early in 2010 are targeting large prospects at Bamboo, offshore Nile Delta, Egypt, and at Anne Marie in the Faroe Islands. These are in addition to three wells in the UK Southern North Sea in close proximity to existing infrastructure and a number of onshore, low risk wells in the North Zeit Bay concession and Western Desert in Egypt with the potential for near-term production gains.
In 2010, Dana looks forward to first production from the Babbage field development and to a first full year of production from the fields which joined the Group through the Bow Valley acquisition earlier this year.
In addition to Dana's extensive exploration and development program, highlighted above, the Company is continuing to appraise new investment opportunities and commercial transactions which can add further value to the Dana group.
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