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S. Korea KNOC Still in Takeover Talks With Dana

Source: Reuters 7/19/2010, Location: Asia

Korea National Oil Corp (KNOC) remains in talks with British oil and gas explorer Dana Petroleum on a takeover that could potentially be worth more than $2.1 billion, a KNOC source said.

Contrary to market rumours KNOC had ended negotiations to acquire Dana, which has oil reserves in the North Sea and North Africa, the KNOC source told Reuters: "Negotiations with Dana are still progressing but no agreement has yet emerged." The source, who has knowledge of the talks, declined to be identified as he was not officially allowed to speak to the media.

State-run KNOC on July 2 confirmed it was in preliminary talks over a cash offer for Dana Petroleum, as it looks to use a $6.5 billion warchest to help double South Korea's oil reserves.

Since the beginning of July, Dana's shares have gained over 30 percent, mainly due to takeover talks.

Both KNOC and Dana have declined to publicly comment on the state of their talks.

While South Korea, the world's No.5 crude oil buyer, said last January that KNOC would lead the country's overseas resource investment drive by adding 50,000-100,000 barrels of oil production per day, KNOC has made no takeover yet. Aberdeen, UK-based Dana Petroleum, said last Friday it would be "shortly producing" 50,000 barrels per day.

Dana has proven and probable reserves of 223 million barrels of oil from 36 oil and gas fields in such regions as Egypt, the North Sea and Morocco.

"KNOC is more interested in Europe or Africa than North America where the firm already has built a foothold via its recent acquisition," said a banker who has knowledge of KNOC's takeover talks but declined to be identified.

KNOC paid $1.7 billion in October 2009 to buy Canada's Harvest Energy Trust in the country's biggest energy investment.

Dana's shares closed at 1,483 pence on Friday, giving it a market value of about $2.1 billion.

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