DANA Petroleum is close to clinching two major asset swap deals that will ramp up its production from the North Sea.
The Aberdeen-based firm plans to sell off some of its international exploration acreage - which is spread between Mauritania, Kenya and Australia - in exchange for producing fields in UK waters.
Dana’s move comes amid a new mood of optimism among North Sea oil firms, which expect 2005 to be the most active year for drilling and exploration since the Chancellor introduced the new tax on oil company profits in 2002.
Chief executive Tom Cross said: "We have two more deals in the pipeline. It’s production in the North Sea being exchanged for international exploration acreage."
He added: "We got nine exploration blocks in the North Sea in the last licensing round. That gives us, in total, about 50 blocks. In our international prospects we have the equivalent of about 600 North Sea blocks spread across west Africa, east Africa and Australia. What we’re doing is trading that potential upside for cashflow in the near term."
Dana cleared its debt pile through eight asset sales and exchange transactions. In November Dana sold its Russian interests to under-fire operator Sibir Energy in a US$28m deal.
A clutch of trades with Australian oil giant Woodside have seen it exchange stakes in parts of its Mauritanian interests in exchange for other African acreage.
It also acquired a major stake in the North Sea’s Johnston gas fields by trading exploration acreage close to the Barbara discovery with Caledonia EU.
Prior to that, Cross did a deal with Amerada Hess which saw Dana trade an early-stage gas project in Indonesia for an additional 28% stake in the North Sea’s Hudson Field, taking its total holding in Hudson up to 47.5%. The deal will boost Dana’s North Sea production by 3,500 barrels of oil per day. Dana will take over operation early this year.
The firm will also begin exploration on the neighbouring Melville prospect within the next few days. Dana has increased its stake in Melville from 17.5% to 26%. Initial estimates suggest the field has oil in place of 30 million barrels.
The Melville field is one of eight that Dana is drilling in the North Sea over the next two years.
Exploration activity across the North Sea is expected to increase sharply in 2005. The number of new projects approved for development is double those sanctioned by the Department of Trade and Industry.
Exploration and appraisal drilling is expected to jump by about 30% year on year, with rigs being pulled back to UK waters from overseas.
Boosted by ChevronTexaco’s recent success west of Shetland - and the high oil price - the number of potential projects earmarked for development has increased to 35 from 28 over the past 12 months.
A spokeswoman for the UK Offshore Operators Association said: "There is a genuine sense of greater optimism across the industry. The level of drilling will be up, the number of developments given approval is up. It should be the busiest year since the tax change."
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