Dana Increases UK Production Through Acquisition

Dana Petroleum has signed an exchange agreement with Caledonia EU Limited by which Dana will acquire a 27.78% interest in the producing Johnston gas field and associated UK North Sea Blocks 43/27a and 43/26a. In exchange, Dana will transfer a 30% interest in Blocks 23/16c, 23/16d and 23/17 and pay a balancing cash consideration at completion. Block 23/16c contains part of the Barbara gas discovery.

On completion of the transaction, Dana's North Sea gas production is expected to rise by approximately 17 million standard cubic feet per day, equivalent to around 2,800 barrels of oil per day. At the effective date of 1st July 2004, Dana estimates the acquisition will add 37 billion cubic feet of gas reserves to the Company, equivalent to 6.2 million barrels of oil. This is offset by the divestment of reserves in Block 23/16c equivalent to 1.4 million barrels of oil.

Final completion of the transaction, which is subject to normal regulatory and partner approvals, is expected to take place in late 2004 or early 2005.

Tom Cross, Dana's Chief Executive, commented:

"This is the second time in two months that Dana has used a small fraction of its long-term, undeveloped reserves to trade into current North Sea production, thus accelerating cash flow and significantly increasing investment returns. During the first quarter of 2005, completion of this Johnston deal together with start up of the Gadwall oil field will further strengthen Dana's portfolio which will then be producing from eleven oil and gas fields."