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Dana Petroleum Completes Exchange Deal With Gaz de France and Secures Additional Assets

Source: www.oilegypt.com 9/28/2006, Location: Africa

Dana Petroleum announced that its wholly owned subsidiary, Dana Petroleum (E&P) Limited, has completed its asset exchange transaction with Gaz de France in which Dana has secured new production in the UK and exploration in the Nile Delta. In addition, Dana has agreed to acquire a number of additional assets from Gaz de France.

Through the exchange transaction, Dana has gained a 25% interest in the UK producing Anglia gas field, an additional 22.113% interest in the UK producing Johnston gas field and a 30% interest in the production sharing contract for the West El Burullus Concession in the Nile Delta, offshore Egypt. In exchange for the above assets, Dana has assigned to Gaz de France a 24% interest in Block 1, a 27.85% interest in Block 7 and a 17.5% interest in Block 8, all offshore Mauritania. Dana will remain as operator of the Mauritania blocks and Gaz de France will continue to operate Anglia and West El Burullus. In addition, Gaz de France will pay all of Dana's costs associated with three exploration wells in Mauritania, one on each of the blocks, up to a cumulative cap of 30 million US dollars. In a reciprocal arrangement, Dana will pay for an additional 30% of costs associated with the first exploration well in the West El Burullus Concession up to a cumulative cap of three million US dollars.

As a result of this transaction, Dana's North Sea gas production has increased by approximately 13 million standard cubic feet per day (2,100 barrels of oil equivalent per day). Dana estimates the exchange will add approximately 19 billion cubic feet of North Sea proven and probable gas reserves to the Company (3.2 million barrels of oil equivalent).

In addition to completing the exchange transaction, Dana has further agreed the acquisition of a number of additional assets from Gaz de France. The companies have already signed a detailed agreement, which is subject to approval of the relevant national authorities, in respect of an additional 20% interest in the West El Burullus exploration licence in the Nile delta, offshore Egypt. In addition, Dana and Gaz de France have agreed headline commercial terms for the assignment from Gaz de France to Dana of further assets, details of which are expected to be announced in October.

Tom Cross, Dana's Chief Executive, commented: "We are delighted to have completed the exchange transaction with Gaz de France at the same time as agreeing to increase our interest in West El Burullus to 50%, further cementing our relationship with Gaz de France in Egypt. This deal has added a valuable new area with significant growth potential to Dana's international business whilst continuing the growth of our North Sea gas portfolio. Furthermore, in being substantially free carried in relation to our ongoing drilling programme in Mauritania, we have substantially improved the risk/reward profile of Mauritania for our shareholders.

This deal is completely in line with Dana's strategy of crystallising longer term exploration value by trading part of those assets for proven and producing oil and gas further advanced in the value chain. Whilst building new exploration opportunities in Egypt and gaining new gas production in the North Sea, we have also maintained our geographic focus on the North Sea and Africa."

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