Jeff McIntosh/The Canadian Press
Suncor Energy Inc. has reached a deal to sell a number of U.K. offshore North Sea properties for about $390-million to an affiliate of Dana Petroleum PLC.
The sale comes as Dana faces a hostile takeover bid by the state-owned Korea National Oil Corp., worth about $2.9-billion (U.S.).
Wednesday's announced transaction involves Suncor's Petro-Canada U.K. unit's 12 offshore production and exploration licences in the U.K. sector of the North Sea.
Production from those assets to date in 2010 has averaged approximately 16,000 barrels of oil equivalent per day net to Suncor. Dana said Wednesday the acquisition gives it 33.5 million barrels of oil equivalent of proven and probable reserves, making the company more valuable.
The sale is expected to close in the fourth quarter of 2010 and is subject to Dana Petroleum's shareholder approval, if required by regulatory authorities.
The properties sold include the Triton and Scott/Telford oil producing areas and the Inner Moray Firth exploration zone.
"Dana's acquisition of these Suncor UK assets is strongly value accretive, the British company's CEO, Tom Cross, said in a release from Aberdeen, Scotland.
"The acquisition is directly in line with our strategic goals of increasing Dana's operated North Sea reserves and production. With this deal, Dana becomes a much stronger business, increasing our . . . oil production and cash flow significantly. By year-end 2010, our total daily production will have risen to around 70,000 (daily barrels), which is nearly double the production rate at the start of the year."
Richard Griffith, analyst at Evolution Securities, said the latest acquisition was "the worst kept secret in the market," and said the Korean bid is likely to succeed.
Dana shares were fractionally lower at 1,805 pence in morning trading on the London Stock Exchange.
The agreement is also part of Suncor's plan to divest of a number of non-core assets. Its sales to date include all oil and gas producing assets in the U.S. Rockies, non-core natural gas properties in Western Canada, all Trinidad and Tobago assets and all shares in Petro-Canada Netherlands B.V.
Including the Dana Petroleum deal, the assets disposed of to date amount to approximately $3.3-billion.
Suncor Energy has operations that include the oilsands in Fort McMurray, Alta., as well as conventional and offshore oil and gas production, petroleum refining, and gasoline marketing under the Petro-Canada and Sunoco brands.
The company is also a gasoline refiner and retailer in the Denver area in the United States through its Phillips 66 stations.