KNOC unmoved as Dana profits gush

KOREA National Oil Corp refused to consider lifting its £1.7 billion hostile bid for Dana Petroleum yesterday as the Aberdeen oil explorer unveiled a near-quadrupling in profits.

Dana hailed the "significant improvement" in interim profits to 82 million from 21.9m in the same period last year. The rise in net profits was even greater, up nearly 1,400 per cent at 35.5m.

But the state-owned Korean company issued a statement saying: "The interim results do not contain any new information that alters KNOC's view on value. Accordingly, KNOC's share offer of 1,800p per Dana share remains full and final."

Dana chief executive Tom Cross countered that the results showed the Scots firm was strong both financially "with all the firepower we need" and in terms of production and reserves replacement.

Cross said: "Why have KNOC come halfway round the world and made a hostile offer for a Scottish company? It's because we are very valuable, that's why."

He cited that the group had "made more profit in the first half of this year than the whole of 2009", when it struck a pre-tax profit of 56.4m. The jump in the first half of this year was jointly fuelled by a strong oil price and increased production, Dana said.

First-half production average was 37,215 barrels of oil equivalent per day (boepd), which Cross said had included the impact of accelerated annual maintenance shutdowns.

He said Dana had increased its oil and gas fields in production from 36 at the start of 2010 to 55 now - 18 being added with the acquisition recently of Petro Canada Netherlands.

The company would drill an extra 22 exploration wells this year, a dozen having been drilled in the first trading half, Cross said.

The group, he added, had also continued its strong record of reserves growth, with 223 million barrels of reserves at the beginning of the year now up to about 270 million. Its reserves replacement ratio through exploration drilling was more than 300 per cent, the company said.

Production projects in the pipeline for 2012 and 2013 included gas in the Arran isles and oil in the Western Isles, he said, while $900m of new facilities with Royal Bank of Canada were important "for giving us all the financial firepower we need. The company can press the accelerator. That's why we rejected the Korean offer."

Dana, which revealed cash generated from operations had jumped 221 per cent to 191.5m, repeated that it planned to publish a detailed response to KNOC's approach no later than 8 September and advised shareholders to take no action until then.

KNOC, which has a $6.5bn warchest to cut South Korea's dependence on imported oil, first approached Dana in June.

Shares in Dana closed yesterday up 4p at 1,810p, still ahead of the KNOC bid.