Dana Says Worth 18% Above KNOC Offer Before Suncor Asset Bid
Dana Petroleum Plc CEO Tom Cross
Dana Petroleum via Bloomberg
Dana Petroleum Chief Executive Officer Tom Cross said, “We need to forget about the price as it was a couple of months ago and look at the true value of Dana today.”
Dana Petroleum Chief Executive Officer Tom Cross said, “We need to forget about the price as it was a couple of months ago and look at the true value of Dana today.” Source: Dana Petroleum via Bloomberg
Dana Petroleum Plc, the Scottish explorer that’s the object of a hostile takeover bid from Korea National Oil Corp., said the offer is 18 percent below its value even before it agreed to acquire Suncor Energy Inc. U.K. assets.
Dana is valued at 2,120 pence a share, based on an independent expert’s asset valuations using the average analyst forecast oil price, the Aberdeen, Scotland-based explorer said today in a statement. That would value the company at 1.96 billion pounds ($3 billion) before it agreed to pay about 240 million pounds to Suncor’s Petro-Canada UK Ltd. for production hubs in the U.K. North Sea.
The 1,800 pence-a-share bid by state-owned Korea National, or KNOC, undervalues Dana, which has projects in nine countries, Chief Executive Officer Tom Cross said last month. Dana’s board “unanimously” recommended that shareholders reject “the inadequate and unsolicited” bid. KNOC Chief Kang Young Won said last month the offer “fully and fairly reflects Dana’s value.”
“KNOC was unaware of the scale of Dana’s exploration program and the impact of the acquisition of” U.K. assets when it tabled its offer, Dana said. The purchase of Suncor’s North Sea assets boosts the total value of Dana to 2,270 pence to 2,465 pence a share, according to the Independent Expert’s asset valuations prepared by Aberdeen-based Senergy Ltd., it said.
Output Forecast
Dana’s production will rise to about 70,000 barrels of oil equivalent a day by the end of the year after the Suncor transaction is completed, the company said. Dana is targeting up to 600 million barrels of oil and gas resources.
The explorer has agreed to extend its banking facility, led by the Royal Bank of Canada, to $1.2 billion from $900 million to fund exploration and possibly repay convertible bonds, Cross told reporters today on a conference call.
Shareholders representing about 49 percent of Dana’s stock sent letters of support to KNOC last month. Nobody at KNOC was immediately available for comment.
Dana is trading above KNOC’s offer price, indicating the market expects a higher bid. The Scottish company shares rose 1 pence to 1,809 pence in London. Dana shares have risen about 54 percent since July 2, when KNOC announced its bid for the company.
“Dana was clearly trading at a very low level when KNOC approached,” Cross said. “We need to forget about the price as it was a couple of months ago and look at the true value of Dana today.”
North Sea Acquisitions
In June, Dana agreed to buy Suncor’s Dutch North Sea assets for 328 million euros ($417 million) in cash, its biggest purchase to date.
Dana will buy interests in fields around the Central North Sea Triton Area and in the Nexen Inc.-operated Scott/Telford Moray Firth fields. The transaction includes the prospective Inner Moray Firth exploration portfolio, Dana said today.
Production from those assets has averaged about 16,000 barrels of oil equivalent per day net to Suncor so far this year, the Canadian company said today in a statement. The sale is expected to close in the fourth quarter and is subject to Dana shareholder approval.
The acquisition will add Dana 33.5 million barrels of oil equivalent of proven and probable reserves as of July 1, it said. Reserves could quadruple by the end of 2012, Dana said.
To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net
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