Dana Petroleum 2010 Annual General Meeting - Detailed Writeup and Notes

Thursday, Jul 01 2010 by
Dana Petroleum 2010 Annual General Meeting  Detailed Writeup and Notes

The 2010 AGM for Dana Petroleum Plc (LON:DNX) – it was their 13th if you are superstitious - took place on June 14th at the Marcliffe Hotel in Aberdeen. The AGM presentations and discussions covered a great deal of material so I’ll give you bullet points rather than full text. What I’m aiming to do here is report the facts as stated at the time and leave you to draw your own conclusions. I should start by explaining that attendance required me to get up at 4am so as to check in at Luton by 6:15. Chaos in the security check area meant I reached the gate only just in time and was one of the last people to board. As luck would have it I found a seat next to Marben who was also making the pilgrimage. As always, his company improved the journey immensely. 

At the Marcliffe Hotel, Marben unleashed his inner boa-constrictor by wrapping himself around a full scottish breakfast considerably larger than himself. If my wife reads this, please note that I contented myself with a pot of excellent tea (I’ve had their coffee before) whilst I tried to lip read the nearby table where Chairman Colin Goodall was holding court with others from Dana. I failed. It must have been the scottish accents. Or the porridge....  Anyway – let’s move on to the proceedings:


There was the entire board of Dana – both executives and non-executives - as well as advisors to the company – including remuneration consultants and the registrars. There were about25-30 people who looked like private shareholders including some bulletin board regulars (Emptyend, Marben, King McKong, Jonnylite, etc. Sorry to those whose names escape me – it’s not you, it’s me) and then about  10 people in smart suits who might have been advisors or institutional investors (or simply members of staff gussied up in their best outfits). 

Introduction - Colin Goodall Chairman

AGM Presentation Part 1 – Tom Cross CEO

I have a feeling that up in the attic of Cross Castle there must be an oil painting that is looking the worse for wear, with paint flaking off and cracks and creases spreading inexorably as the frame slowly crumbles. Its subject looks thinner and fitter every year. He used to be about my age (well just a little younger) but these days he looks almost young enough to be my son. 

The acquisition of Petro Canada Netherlands was announced the morning of the AGM– details later

2009 Highlights

  • Bow valley acquisition
  • Drilled 17 wells including:
    • Rinnes
    • Fulla
    • Anchois
    • Tornado
    • Egypt
    • Norway
  • Hyperdynamics/Guinea farm-in
  • Reserves
    • Discoveries = 43 mmboe
    • Acquisitions = 12 mmboe
    • Reserve replacement = 300%
  • Projects
    • E18 now on stream
    • Ettrick now on stream
    • Babbage coming on stream in next few months
    • Barbara/Phyllis on schedule (2012/13)
    • Western Isles on schedule (sanction 12/10, Execution 2011/12) 
  • Notes on project/asset names
    • Barbara/Phyllis to be renamed Arran
    • “Western Isles” is new name for Hudson , Mellville & Rinnes. 
    • Melville = Barra; Uist = SE Rinnes; Lewis = W Rinnes; Harris = E Rinnes. 
    • Two further prospects situated in “central Rinnes” = Pabbay & Berneray 
    • Total P50 = 65mmbbls for Western Isles

2010 highlights to-date


  • Drilled 6 wells
  • Made 3 commercial discoveries
    • Papyrus
    • Platypus
    • E Beni Suef
  • Drilling currently/imminently
    • Bamboo
    • Monkwell
    • Blackbird
    • Lorcan
  • Total 18 wells in 2010
  • ·New licences
    • Norway
    • Egypt
    • Guinea


  • Babbage
  • Barbara/Phyllis
  • Western Isles

Production Profile

  • 208 producing wells
  • 78% N Sea
  • 81% oil 
  • Currently = 39,000-40,000 boepd
  • Excluding petro canada contribution 
    • Year-end expectation = 37,000 – 41,000
    • 2011 expected to remain flat 
  • With petro canada acquisition 
    • Perhaps year-end rate will start with a 5??
  • Development Projects = 5
  • Appraisal Projects = 22
  • Reserves increased from 194 mmboe at end 2008 to 223 at end 2009
  • 100 mmboe of reserves are currently in production
  • Materiality of Exploration Programme increasing
    • 2007 programme targeted 3 billion boe unrisked = 100 million boe risked
    • 2010 programme is targetting 3.5 billion unrisked = 300-600 million boe risked
  • Change in materiality derives from bigger % interests net to Dana
  • 2009 Preliminary Results
    • Production = 38,700 boepd
    • Revenue = 397.3 million 
    • Ebitdax = 227.7
    • Profit = 56.4 million
    • Net debt at end 2009 = £24 million 
    • Gearing = 22%

2010 capex

  • Production + development = 119 million
  • Exploration + appraisal = 115.9 million


  • New RBC $900mn facility
  • Convert put should be covered.

AGM Presentation Part 2 – Stuart Paton Technical & Comm. Director


  • Long exposition on this subject
  • Biggest issue seems to be road traffic accidents in Egypt

Current Production

  • 36 fields
  • 208 wells
  • Oil:gas = 81:19
  • 2009 Production was less than planned due to issues at 
    • - SNS
    • - Ettrick
    • - E Zeit
  • 2010 Production expected to come in at 37k-41k
  • Issues
    • Gas price dynamics
    • Infill opportunities

NW Europe

  • 21 fields = 78% current total production
  • E18 started 06/09
  • Ettrick started 8/09
  • Infill potential
    • Cavendish
    • Johnston
    • Goosander
    • Jotun
    • Otter
  • Growth potential from developments at
    • Babbage
    • Western isles
    • Barbara/phyllis


  • E Zeit 
    • Dana = 100%
    • Current production = 4000 bopd
    • Water cut increased on C2
    • ESP failure
    • Potential to increase by workovers, infill and optimisation
    • New targets being assessed
  • Western Desert
    • 3 fields
    • Operated by Eni (1) and Apache (2)
    • Workovers = 40 in 2008 and 30 in 2009
    • New development wells = 18 to-date
    • Reduced capital budget in 2009 = reduced activity
  • East Beni Suef (Dnx 50%, op = Apache)
    • Production disappointing because of delays in bringing fields on stream
    • 3D seismic recently acquired
    • Exploration licence extended
    • Recent discoveries due on stream this year
  • ·West Abu Gharadig (Dnx 30%, op = ENI)
    • Active drilling programme to stabilise production
  • Qarun (Dnx 25%, op = Apache)
    • Recent horizontal well programme
    • Recent frac programme
    • Issues with production facilities
    • 3D seismic in 2009
    • Gas project 2010

Development timeline

  • · 2005 
    • Gadwall
    • F16
  • 2006 
    • Goosander
  • 2007 
    • Cavendish
    • Enoch
  • 2008 
    • Grouse
  • 2009 
    • E18
    • Ettrick
    • Chestnut
    • EBS
  • · 2010 
    • Babbage
    • EBS
  • · 2011 
    • EBS
  • · 2012 
    • WEB
  • · 2013 
    • Barbara/Phyllis
    • WID

Ettrick Project (Dnx 12%, Op = Nexen)

  • Gas and oil
  • Acquired via Bow Valley
  • 4 production wells + injection
  • Production ramp up affected by compressor and other problems
  • Reserves and production turning out better than forecast
  • Significant additional potential in field and nearby also better than previously expected as shown by recent wells
    • E3Z
    • PND

Babbage Project (Dnx 40%, Centrica 13%, Eon = Op)

  • Gas
  • First phase completed, fraccing in progress
  • 1st production planned mid 2010
  • Phase 2 = 2-3 more infill wells if phase 1 OK
  • Significant upside potential towards south east

Western Isles Development (nee Rinnes) (Dnx = 65% and Op)

  • Oil
  • 4 separate accumulations
  • P50 reserves = 65 mmbo
  • Significant potential in further fault blocks = 35 mmbo
  • Project go ahead expected 12/2010
  • Might farm out
  • First oil = 01/2013

Barbara/Phyllis Development Project (Dnx = op)

  • Gas
  • Plan is 3-4 wells tied back to Lomond
  • FEED started last week
  • Project go-ahead expected end 2010
  • First gas expected Q4/2012

Exploration Programme


  • 17 wells targetting 68 mmboe
  • 7 successful discoveries = 60 mmboe
  • Booked 43 mmboe
  • Exploration spend = £145mm
  • Finding cost = $4/boe

Morocco – Tanger-Larache (Dnx 15%)

  • Anchois gas discovery 03/09 
  • Estimate = 100 bcf
  • Anchois derisked a lot of other gas prospects
  • At least 7 more similar prospects already mapped
  • 3D seismic in progress
  • Expect large number of additional prospects
  • Drilling 2011/12
  • First gas production 2013/14
  • Gas prices in line with European tariffs
  • Good fiscal terms

West of Shetland

  • TOTAL putting in gas infrastructure helps DNX develop any finds there

West of Shetland – Tornado (Dnx 30%, Faroe 10%)

  • Gas and oil discovery 10/09
  • P50 = 350 bcf
  • No further appraisal required
  • Anticipate joint development with Suilven

West of Shetland – Anne-Marie

  • Drilling due July 2010
  • Analogous to Rosebank

West of Shetland – Other

  • Multiple multi-TCF prospects already identified
  • Drilling in 2011

Norway-Fulla (Dnx 10%)

  • Gas discovery = 40-80 mmboe
  • Close to existing infrastructure
  • Commercial interest expressed by 3rd parties

Norway – Eitri & Jetta (30%)

  • Oil
  • Proximity to Jotun = low development cost
  • Decision on development by mid 2010
  • Infill drilling potential

2010 Exploration Drilling Programme



Dnx %

spud date










EBS (4 wells)

N zeit bay (2 wells)



















gas discovery



rig contracted

1 discovery to date

1st well drilling






spud imminent


















gas discovery









non-commercial disco












rig contracted


  • LNG and CNG studies in progress
  • Cormoran drilling before end 2010
  • Cormoran will use new Maersk rig, built in Singapore and now enroute
  • Could be “several TCF”
  • May be liquids rather than gas
  • Pelican economic if another 2+TCF at Cormoran


  • Acreage = 29,000 km2 
  • Dnx = 23%
  • Hyperdynamics looking to bring in a major who will become operator
  • 2D acquired
  • 3D to be acquired summer 2010
  • Drill well before end 2011
  • Jubilee look-alike prospect

AGM Presentation Part 3 – Tom Cross CEO

Work Programme for 2010-2011

  • Too much detail to reproduce here

Opportunity Pipeline – Europe & International

  • Too much detail to reproduce here but NB TC singled out Morocco as particularly exciting 

AGM Presentation Part 4 – Tom Cross CEO

Petro-Canada acquisition

  • Cross made a detailed presentation on the acquisition. I haven’t got time to go into it right now but will come back to it separately in the next week or so if I get time. NB: Worth just saying 67mn bbls of potential upside in the acquisition

AGM Presentation Part 5 – Colin Goodall – Chairman

  • The formal business of the AGM – lots of resolutions and voting and overwhelming proxy votes cast on behalf of investment funds who didn’t attend and investors who’ve never even heard of Dana.

Pre/Post AGM

  • As always there were opportunities for informal face-to-face discussions with management before and after the meeting. These were extremely informative and valuable but my notes are not up to scratch so I can’t report on this part of the proceedings.

Post-Match Analysis

  • Stockopedes and Fools had a pub lunch at No 19 (I think that’s the name?) just round the corner from Dana’s offices. Great craic but can’t say the same about the pub. I would like to propose that next year this session is relocated to the Moonfish Cafe in Correction Wynd (what a great name) which does sensational food and excellent wine – not sure what their beer is like.

Travel survival guide

  • EasyJet’s flights are often delayed but this time the return was cancelled at the last minute which meant I was stranded in Aberdeen with 24 hours to kill. EasyJet’s passenger services were utterly inadequate – one girl to deal with the entire plane full of passengers. Moral – don’t fly Easyjet. Fortunately I was able to gatecrash a social gathering being held that evening by local Fools who proved very welcoming. Less fortunately I was billeted at a flop house in a rough part of town. 

Highlights and triumphs of the next day at large in the big city....

  • Super-efficient bus service with friendly passengers who talk to you!!!!!!!
  • Fabulous coffee at J Lewis espresso bar – friendly staff
  • Gap selling knickers and socks in singles
  • M&S selling decent polo shirts at £12
  • Moonfish Cafe – sensationally good food – excellent wine – great service – modest bill – can’t recommend it highly enough (It’s not a cafe at all – more a bistro kind of thing – but boy do they know what they are about in that kitchen.) see www.moonfishcafe.co.uk
  • Books&beans - internet cafe – friendly and efficient – clean and comfortable – good coffee – cheap – see www.booksandbeans.co.uk
  • Provost Skene’s House – great 16th century house right in city centre, some fine paintings and remarkable painted ceilings/panelling. See provostSkenesHouse
  • The whisky shop at the airport


There may be significant errors and omissions in the material above. Use it at your own risk


Thanks to Emptyend and Marben for correcting some of my errors and omissions. Responsibility for any errors that remain is entirely mine.

Filed Under: Oil,


The author may hold shares in this company. All opinions are his own. You should check any statements that appear factual and seek independent professional advice before making any investment decision.

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4 Posts on this Thread show/hide all

nigelpm 1st Jul '10 1 of 4

Stonking write up Tournes!

I almost (!!) hope KNOC don't get hold of Dana so that one isn't the last AGM as a couple of days in Aberdeen next year could be a lot of fun.

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doverbeach 1st Jul '10 2 of 4

Great write up, esp the restaurant reviews explo table  - much appreciated and fingers crossed for Anne-Marie!

One small comment, you say Arran (Baraba/Phyllis) is expected first gas Q4 2012. This is going through the new Lomond facility, where Serica are quoting 'early 2013'.  So not much difference :)



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AbAngus 1st Jul '10 3 of 4

Bloomin' heck - what an amazingly good write up! Thanks.

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emptyend 1st Jul '10 4 of 4

Yes - excellent write-up T.

In order to round things out I might just make reference to questions raised in the formal session and afterwards:

The Tournesol/Marben/Emptyend group in the second row asked more than their fair share of questions. The main one I recall was querying the comparator group being used for the LTIP and salary benchmarking - and I pointed out that this group was vastly too wide and included a whole raft of MAJOR energy companies, with whom salaries (in particular) were being compared (reasonably favourably, despite the private claims of a director I won't name ;-)).  Shareholders will be pleased to know (in the light of the possible need to negotiate with a potential bidder, announced today) that Tom Cross's new lean demeanour appears to be the result of interbreeding a strain of racing whippets with a Staffordshire bull terrier - as he quickly bared his fangs and leapt to his own defence! Nevertheless, I think the points I made were extremely apposite and were taken on board by the board - and by the remuneration consultant whom I buttonholed for a very lengthy chat afterwards!

Of more interest perhaps, in the light of today's developments, is the fact that I had a one-on-one chat with Tom Cross just before everyone decamped for lunch. In particular, I was talking about investor relations and the need to get the message out to analysts - most of whom don't really understand the company. Tom had just hired a full-time IR person with this in mind and it was clearly a priority. Discussion then moved on to me making the point that Dana was extremely vulnerable to a bid in present circumstances, being quite out of favour amongst the peer group and very undervalued relative to most analyst estimates of NAV....and especially with the well at Anne Marie (which could be very much larger than the market thinks, as there are multiple targets) yet to spud.  This was something he agreed with and, intriguingly in retrospect, we went on to agree that probably what will happen at some point is a step-change repricing of Dana's shares, triggered either by a bid approach or by drilling success. I have formed the view over the last 9 months that Dana/Tom has recently become more amenable to the idea of selling out completely (having previously vehemently opposed it), so I wasn't surprised to hear that - and I assumed that they were equally likely events over the course of the next few months.  My conclusion at the time was that there had been no bid approach by the time of the AGM, though today's announcement (following so soon after the AGM) makes me wonder whether there was already some inkling of bid approaches (and perhaps whether that triggered the IR hiring).

Anyway - very interesting AGM (as usual) .......and I have the feeling that some of us may well be reconvening at an EGM in a few weeks time, now that the potential agenda could be a bit more interesting than just a nod-through of the Dutch acquisition.

I'd also note, by the way, that the bid approach should be non-negative for the rest of the FTSE350 peer group, several of whom are equally (or even more, in one or two cases) vulnerable....so we might be in for a very interesting period, as there are certainly a munber of potential bidders circling around the E&P space - and there may be a few of them under pressure to find a strategic response to the implications of the BP incident for those who have deepwater strategies?


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