Dana reports 274% jump in profits as it prepares to fend off KNOC's $1.9bn bid
Dana Petroleum announced a 274 per cent increase in half-year profits yesterday and urged investors to take no action on a £1.87bn hostile bid from the Korea National Oil Company (Knoc) until it had set out its defence on 8 September.
The Aberdeen-based oil and gas explorer also failed to update the market on its expected purchase of North Sea oilfields from Suncor Energy of Canada – a move that prevents Knoc, the state-owned South Korean company, from buying any shares in its target because it has been privy to inside talks on deal.
Dana said it had identified further merger and acquisition targets after buying Petro-Canada Netherlands (PCN) from Suncor earlier this month. But it declined to comment more specifically on speculation about its potential £240m acquisition of Suncor's North Sea fields.
Knoc offered £18 a share for Dana last week but the explorer swiftly rejected the bid as undervaluing the company. Dana said it would present a detailed response, including information about the value of its assets, before 8 September in accordance with the Takeover Code timetable.
The company said: "The board urges Dana shareholders and bondholders to take no action prior to that date."
The two companies actually held talks in Calgary, Canada, earlier this month but were unable to agree on terms that would give Knoc access to Dana's books. Given that non-public data was discussed at the meeting, insider trading rules mean the information would have to be disclosed before Knoc could proceed with buying Dana shares.
Having raised its initial bid from £17 a share, Knoc refused last week to improve its offer beyond £18.
Over the six months to 30 June, Dana increased its pre-tax profit by 274 per cent to £82m and generated £191.5m of cash.
Tom Cross, the chief executive, said Dana had performed "very strongly" in the first half and delivered interim profits that exceeded its full-year earnings for 2009.
"We have also grown reserves by 54 million barrels of oil equivalent through new discoveries and via acquisition," he added.
Dana said it had already made six oil and gas discoveries in Egypt and the UK this year, while the purchase of PCN had increased its operating capability in the North Sea.
Mr Cross said: "The Dana team is delivering the most successful phase of growth in the company's history."
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