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Dana Petroleum PLC (DNX)

  Print      Mail a friend       Annual reports

Wednesday 08 September, 2010

Dana Petroleum PLC

Value-based Defence

RNS Number : 3295S
Dana Petroleum PLC
08 September 2010
 



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

 

Dana Petroleum plc ("Dana" or the "Company")

8 September 2010

 

Dana sets out its Value-Based Defence

 

Rejects KNOC's inadequate 1800 pence per share Offer

 

Value range1 between 2270 - 2465 pence per share with major additional upside

 

The Board of Dana (the "Board") is today posting a circular to Shareholders setting out the valuation of Dana based on an Independent Expert's asset valuations. The Independent Expert's Report supports the Board's view that the offer made by Korea National Oil Corporation ("KNOC") for all the issued and to be issued shares of Dana and its Convertible Bonds (the "Offer") is inadequate and fails to recognise Dana's existing value and strategic importance to KNOC.

 

Dana's defence circular highlights that the Company is in a period of transformational growth. Dana ended 2009 with average production of 38,653 barrels of oil equivalent per day ("boepd"), and expects to end 2010 with a pro forma production exit rate of approximately 70,000 boepd. During 2010 so far, Dana has added 87.5 million barrels of oil equivalent ("mmboe") through the drill bit and acquisitions. From now until the end of 2011, Dana will be targeting up to 600 mmboe through its drilling programme. KNOC was unaware of the scale of Dana's exploration programme and the impact of the acquisition of the UKCS oil producing interests of Petro Canada UK Limited (the "PCUK Assets") when it tabled its 1800p Offer.

 

The Board unanimously recommends that shareholders reject the inadequate and unsolicited Offer. The Board believes that KNOC's Offer, first proposed to the Company in July prior to Dana's strong interim results and the announcement of today's value accretive UK acquisition, fails to reflect:

The value of Dana's existing assets

·      Dana is valued at 2120p per share based on the Independent Expert's asset valuations using the average analyst forecast oil price. This is a 17.8% premium to KNOC's opportunistic and inadequate Offer, before taking into account the value of Dana's acquisition of the PCUK Assets announced today

·      Using the forward curve, Dana is valued at 2312p per share based on the Independent Expert's asset valuations excluding the PCUK Assets, demonstrating Dana's sensitivity to the oil price

·      Based on 3P NAV, the value of Dana increases to 3053p per share excluding the PCUK assets

The value of Dana's acquisition of the PCUK Assets

·      Dana has today announced the acquisition of the PCUK Assets from Suncor

·      Dana is paying £240 million for the PCUK Assets which are valued at £368 million based on the Independent Expert's asset valuations - adding a further 149p per share to Dana's 2P NAV and 326p per share to its 3P NAV (both including the benefit of significant capital allowances)

·      Dana's acquisition of the PCUK Assets increases the total value of Dana to between 2270p and 2465p per share, based on the Independent Expert's asset valuations

Dana's material upside potential

·      Dana has significant exploration prospects which, if successful, could quadruple reserves by the end of 2012

·      KNOC's Offer is opportunistic ahead of Dana's significant near-term drilling programme

·      Dana is drilling the high impact Anne Marie and Cormoran prospects in the next two months which, if successful, will be material for the Company, and these two prospects alone are valued at 585p per share Unrisked, based on the Independent Expert's asset valuations

The strategic importance of Dana's assets and its management team to KNOC

·      KNOC has publicly stated it has very ambitious reserves and production growth targets. KNOC needs to more than double its production and reserves by 2012 - but opportunities for KNOC to meet these targets are scarce

·      KNOC's Offer does not recognise the value of the Dana management team and its excellent track record of growing reserves and production, or the value of security of oil supply and protection for KNOC against future oil price increases

 

 

Colin Goodall, Chairman of Dana commented:

 

 "For proof that Dana is worth substantially more than 1800p per share, our shareholders need look no further than KNOC's extraordinary actions.  For a national oil company to launch a hostile offer without access to detailed technical information, means KNOC must be highly confident that the Dana assets are worth much more than their offer price. 

 

KNOC has an urgent need for reserves and production to meet its published corporate targets, set by national priorities.  Dana's assets and operational management teams are of strategic importance to KNOC and Dana shareholders should rightly demand a full and fair value for surrendering control of a strong independent company, with high quality assets dominated by OECD oil production."

 

Tom Cross, Chief Executive of Dana commented:

 

"The Dana Directors have one overriding priority, that is to maximise value for all Dana shareholders.

 

Since the first moment KNOC approached Dana, we have held out the hand of friendship and asked KNOC repeatedly to hold a proper value discussion with the Board of Dana. KNOC has consistently refused this path, preferring to go hostile without access to full information on Dana. As a consequence, KNOC has failed to win the support of the Dana Board which has created a highly successful international oil company, through the exceptional levels of commitment, skill and experience of the Dana team, and does not want to see the Company sold below fair value to the detriment of Dana shareholders.

 

During 2010, Dana is on course to nearly double production to 70,000 barrels per day and grow its reserve base significantly.  This is transformational growth by any measure, and KNOC's bid, based on incomplete information, is simply not reflective of the true value of the Company.  I would encourage all shareholders to read Dana's defence circular published today, which includes an independent expert valuation report. This demonstrates that KNOC's offer of 1800p would utterly fail to compensate Dana's shareholders for both Dana's existing asset value and for the significant upside potential already embedded in the business."

 

 

 

Shareholders who wish to reject KNOC's Offer need do nothing and should not sign any document which KNOC or its advisers send to them.

 

Dana will write to you again during the course of the Offer to keep you informed of any developments. In the meantime if you have accepted the Offer, you should be aware that if the Offer has not become or been declared unconditional as to acceptances by 1.00p.m. on 14 October 2010 you can withdraw your acceptance of the Offer.

 

If you have any queries about KNOC's Offer, please contact the shareholder helpline operated by Salisbury Associates on 0800 987 8750 (from overseas +44 207 199 7783) from 9.00a.m. to 5.00p.m. Monday to Friday.

 

Defined terms in this announcement have the same meaning as set out in the circular to be posted today unless otherwise defined in this announcement.

 

1Range represents average analyst and forward curve oil price cases, on a 2P NAV basis

 

Further information for Shareholders is contained in the circular being posted today and which will be available later today on www.dana-petroleum.com.

 

 

 

Enquiries

 

Dana Petroleum Plc

01224 652 400

Colin Goodall, Chairman


Tom Cross, Chief Executive Officer




RBS Hoare Govett (Lead Financial Adviser and Joint Broker)

020 7678 8000

Stephen Bowler


John MacGowan


Graham Hertrich




RBC Capital Markets (Joint Financial Adviser and Joint Broker)

020 7653 4000

Tim Chapman


Josh Critchley




Morgan Stanley & Co. Limited (Joint Financial Adviser)

020 7425 8000

Andrew Foster


Ian Hart




Brunswick Group LLP

020 7404 5959

Patrick Handley




College Hill Associates

020 7457 2020

Nick Elwes


 

The Directors of Dana accept responsibility for the information contained in this announcement. To the best of the knowledge and belief of the Directors, who have taken all reasonable care to ensure such is the case, the information contained in this announcement is in accordance with the facts and does not omit anything likely to affect the import of such information.

 

RBS Hoare Govett Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Dana and no one else in connection with the Offer and this announcement and will not be responsible to anyone other than Dana for providing the protections afforded to clients of RBS Hoare Govett Limited nor for providing advice in connection with the Offer or this announcement or any matter referred to herein.

 

Royal Bank of Canada Europe Limited ("RBC Capital Markets"), which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Dana and no one else in connection with the Offer and this announcement and will not be responsible to anyone other than Dana for providing the protections afforded to clients of RBC Capital Markets nor for providing advice in connection with the Offer or this announcement or any matter referred to herein.

 

Morgan Stanley & Co. Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Dana and no one else in connection with the Offer and this announcement and will not be responsible to anyone other than Dana for providing the protections afforded to clients of Morgan Stanley & Co. Limited nor for providing advice in connection with the Offer or this announcement or any matter referred to herein.

 

The statements contained in this announcement that are not historical facts are "forward-looking" statements. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Dana's control and all of which are based on the current beliefs and expectations of the directors about future events. Forward-looking statements are typically identified by the use of forward-looking terminology such as "believes", "expects", "may", "will", "could", "should", "intends", "estimates", "plans", "considers", "assumes" or "anticipates" or the negative of such words or other variations on them or comparable terminology, or by discussions of strategy that involve risks and uncertainties. In addition, from time to time, Dana or its representatives have made or may make forward-looking statements orally or in writing. Such forward-looking statements may be included in, but are not limited to, press releases or oral statements made by or with the approval of one of Dana's authorised executive officers. These forward-looking statements and other statements contained in this announcement regarding matters that are not historical facts involve predictions. No assurance can be given that such future results will be achieved. Actual events or results may differ materially as a result of risks and uncertainties facing the Dana group, joint ventures and associated undertakings. Such risks and uncertainties could cause actual results to vary materially from the future results indicated, expressed or implied in such forward-looking statements. The forward-looking statements contained in this announcement speak only as at the date of this announcement. Except to the extent required by applicable law, the Listing Rules, the Disclosure and Transparency Rules and/or the City Code on Takeovers and Mergers, the Company will not necessarily update any of them in light of new information or future events and undertakes no duty to do so.

 

No statement in this announcement is intended as a profit forecast or profit estimate and no statement in this announcement should be interpreted to mean that the earnings per share of the enlarged Dana group and/or the Dana for the current or future financial periods will necessarily match or exceed the historical or published earnings per share of Dana.

 

A copy of this announcement will be made available free of charge via the Company's website (www.dana-petroleum.com) for so long as the Company remains in an offer period in relation to the KNOC Offer.

 

 

Disclosure requirements of the Takeover Code

 

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any paper offeror is first identified.

 

An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any paper offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

 

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

 

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

 

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

 

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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