‘Less risky exploration strategy’

North Sea oil and gas firm Dana Petroleum made further progress towards a return to the black during 2016 as it adopted a “less risky exploration strategy”.

Accounts lodged at Companies House show the Aberdeen firm suffered pretax losses of £137.7million last year – a significant improvement on a trading shortfall of around £260million the year before. And the latest figure is substantially better than losses of £446million in 2014.

The last time Koreanowned Dana was profitable was in 2013, before oil prices slumped, when it generated £145million at the pre-tax level.

Dana declined to comment yesterday on its latest figures and business developments.

But a strategic report in the firm’s accounts said overall production fell to 48,083 barrels of oil equivalent per day last year, from 50,631 in 2015 after it withdrew from Norwegian and west African operations.

It added: “In the UK, continued strong operational performance on the operated assets, particularly in the Greater Guillemot area, has been offset by field decline on the more mature non-operated portfolio and the impact of fields moving into the decommissioning phase.

“The most significant contributions in terms of production are associated with participation in the fields of the Greater Kittiwake area (GKA), the Greater Guilliemot area (GGA), Babbage, Cavendish, Captain, Hudson, Scott, East Zeit, North Zeit Bay, Hanze and the De Ruyter area.”

Dana has operations in the UK, Dutch and Danish sectors of the North Sea, as well as Egypt.

The company – controlled by the Korea National Oil Corporation – also sold its 13.18% stake in fellow Aberdeen company Faroe Petroleum last year, to Israel’s Delek Group.

Dana said a £770million credit facility with a syndicate of 10 banks – cofronted by BNP Paribas and Commonwealth Bank of Australia – would help fund future growth.

It is also benefiting from a £462million loan option – unused as of last week – secured from its parent last year.

The accounts also show Dana and its UK North Sea Western Isles Development Project (WIDP) partner, Cieco UK, struck a deal with a contractor earlier this year to “defer certain final stage payments” to April/May 2018.

WIDP achieved UK Government approval in December 2012 and development well drilling started the next year.

The £1.4billion development, in which operator Dana has a 76.92% stake, with Cieco owning 23.08%, was “reset” at the end of 2014, with a longer timeline and bigger budget. First oil is expected later this year.

A floating production, storage and offloading vessel for the project was completed at the Cosco Shipping yard in Qidong, China, in February.

In its accounts, Dana said it continued to make progress on three other new UK North Sea projects. These are Arran, a central North Sea gas condensate discovery, and southern North Sea gas prospects Tolmount and Platypus.

“All development activities are being reviewed in view of the current operating environment to ensure appropriate capital and resource allocation,” Dana said.