PERRENIAL takeover favourite Dana Petroleum has finally got an official offer. At 1,176p a share, Dana is valued at £1.09bn and KNOC’s bid is believed to be around £1.5bn. But investors shouldn’t let it go on the cheap. Yes its recent update declaring that the Monkwell gas discovery in the UK North Sea was too small to be economic was disappointing, but it is exactly this that makes Dana “a cleaner kill” according to broker Evolution. “The fact that Dana only has two major wells left to drill this year, should mean that the starting point for valuation is that much closer,” it says.
At the end of 2009, Dana had proven and probable reserves of 223m barrels of oil equivalent, producing from 36 fields in the UK North Sea, Egypt and in North and West Africa. With 2009 revenue of £397.3m, and net profit of £22.m, KNOC will have to pay a significant premium. Typically this should be 40 per cent – or £16.45 based on Dana’s closing price yesterday. KNOC, which has $6.5bn for acquisitions to spend this year alone, can afford to cough up more.