Dana resists pressure to start serious sale talks with Koreans

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The Independent Online

Dana Petroleum rejected calls to step up talks with Korean National Oil Corporation as it came under pressure from investors over a 1,800p-a-share approach from the state-owned company.

Dana's shares soared by 13.4 per cent to close at 1,706p last night after Knoc went public with the price of its approach and accused its target's board of failing to make a "satisfactory response" to the £1.7bn proposal.

However, Dana retorted that senior managers of Knoc had refused to accept offers to meet with Dana's chief executive and chairman. It also said Knoc and its advisers "have repeatedly failed to clarify questions on their potential financing, which they have informed Dana is not yet in place".

It added: "The board of Dana will only be prepared to consider granting exclusivity and access to due diligence on the company to any offeror, including Knoc, when it has received, inter alia, comfort on financing and other execution risks."

Investors, including Dana's largest shareholder, Schroders, have called on Dana to enter talks on the latest offer. "Dana management do not seem to be engaging with what most in the market see as a fair and reasonable offer," one industry source said.

The Korean group first approached Dana in mid-June, with an indicative offer of 1,700p, far higher than the group's then-share price of 1,107p. Its interest in Dana stems from a target to reach 300,000 barrels of oil equivalent (boe) per day of production and 2 billion barrels of reserves by 2012. So far Knoc's operations – which include assets in Canada, Central Asia and Africa – run to about half the target production level.

Dana Petroleum is involved in 16 North Sea fields either in production or under development, and another seven in the Netherlands, Norway and Egypt. Its assets produce just short of 39,000 boe per day, and it also has extensive exploration interests in Europe and Africa. Last month Dana expanded its operations in the Dutch sector of the North Sea by buying Petro-Canada Netherlands for €328m (£273m), in a move it said could increases its production this year by up to 12 per cent.

Tom Cross, the Dana chief executive, could make as much as £33m in a sale from his 2 per cent stake in the company. According to long-running City gossip, late last year, BP's name was also linked to a 1,800p offer for Dana. And last month Austria's OMV was reportedly considering a move.

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