Dana shares reach highest this year on gas discovery

SHARES in Dana Petroleum rose yesterday to their highest level this year after the firm unveiled a "significant" gas discovery at a well in the UK North Sea.

The Aberdeen-based group said the find, which was in line with its initial estimates for the well of about 130 billion cubic feet of gas, bodes well for further exploration in the region.

Dana said the site, known as Platypus, was the first of its three-well digging programme in the UK Southern North Sea.

The well was drilled in a water depth of 142ft to a total depth of 11,048ft where the firm said it found "good quality gas-bearing sands".

Chief executive Tom Cross said: "The Platypus gas field is situated in shallow water, with good reservoir quality and in close proximity to existing infrastructure.

"These are all very positive factors in respect of moving ahead with a gas development.

"This success also significantly improves the potential for further exploration in the block, including the adjacent Possum prospect."

Further tests will now be performed on the Platypus field to assess development options.

Leman, the reservoir targeted by the drilling, is the major producer in the Southern North Sea, and Dana is already producing gas from it at its Johnston, Victor and Anglia fields.

It is also working in the reservoir in the Babbage field, which the firm is currently developing and is expected to produce its first gas in the middle of this year.

Sanjeev Bahl of Numis Securities said if Dana's tests prove positive the company could seek to link with the E.ON-operated Babbage development, or consider an asset sale or swap of Platypus "once the discovery has been proven to be commercial".

Platypus is located close to Babbage infrastructure, which should ensure relatively low per-barrel development costs, and the Leman sand gas discovery de-risks further prospecting on the block including the Possum prospect, Bahl added.

Dana produces from 36 oil and gas fields across four countries and holds more than 100 interests in exploration and production licences spanning eight countries.

Its activities are focused on the North Sea, Norway and the Netherlands and in Africa.

Shares in Dana closed up 39p, or 3.1 per cent, at 1,308p, valuing the company at some 1.2 billion.