Dana Petroleum Spuds Pelican-1 Well Offshore Mauritania

Dana Petroleum has begun drilling operations offshore Mauritania. This first well, named Pelican-1, is being drilled in Block 7, around 150 km north of the Chinguetti Oil Field. The well has a target total depth of around 3,800 meters below sea level and the water depth is approximately 1,700 meters.

Pelican-1 spudded on November 30th and is currently at a depth of 2,571 meters below sea level, running 20 inch casing. It is expected to take between 30 and 40 days to complete. The well is planning to examine a number of Tertiary age prospects within a large, robust structural closure in a region where the presence of oil has been demonstrated in the nearest wells, in Block 6.

Dana has sought to make the Block 7 operations as efficient as possible by entraining existing regional expertise. Dana has therefore contracted GlobalSantaFe to drill the well using the ultra deepwater drillship, the 'Jack Ryan', which has just completed successful appraisal drilling and testing at the Chinguetti Oil Field in Block 4. In addition, Dana has concluded an agreement with Woodside Energy to manage the in-country drilling operation on behalf of the Block 7 co-venturers under an incentive arrangement.

Ahead of drilling operations, Dana has reduced its net cost exposure to the well from 80% to 54.5% through two farm-in option agreements. A subsidiary of GlobalSantaFe has agreed to pay 22% of the well costs in return for an option to acquire 22% of the Block 7 Production Sharing Contract ('PSC'), and an existing Block 7 partner, Roc Oil (Mauritania) Company, has agreed to pay a total of 5.5% of the well costs in return for the option to increase its share of the Block 7 PSC from 2% to 5.5%. Co-venturer Hardman Resources Ltd, is maintaining its 18% interest. Following the well, if certain attractive drilling cost reduction targets have been met, Woodside will be able to acquire up to 10% of the Block 7 equity by paying its respective costs.

Therefore, in the event of a successful well, assuming all farm-in options are earned and exercised, Dana would hold a 49.05% stake and remain as the PSC Operator. This is in line with Dana's strategy to target an optimum interest of 50%.

Commenting on the news, Tom Cross, Dana's Chief Executive, said: 'Dana has achieved its objective of drilling and financing this deep-water well at the earliest opportunity, whilst maintaining a significant stake in the long-term upside of the PSC. By bringing together and commercially aligning a group of companies with valuable Mauritanian experience, we have given ourselves the best chance of success both now and going forward in Block 7.'

This first well is one step in an extensive exploration program offshore Mauritania. Dana has already acquired substantial seismic across Blocks 1, 7 and 8, where the Company's 34,000 sq km offshore licensed area is the equivalent of over 150 UKCS blocks.

The Pelican-1 well will lead Dana into its 2004 campaign of international exploration and appraisal drilling, with further wells planned in Indonesia and Western Australia during the coming months, along with decisions on future drilling in Mauritania.