The transaction now closed covers:
i) DNO Britain Limited which through its wholly owned subsidiaries includes the following interests:
- 100% Heather field
- 99% Thistle field
- 55% Broom field
The Heather and Thistle fields are mature producing fields in the UK North Sea whilst the Broom field is a new field currently under development, located adjacent to Heather. The Broom field will be tied back to the Heather facilities thereby extending the economic life of the Heather field. The Broom field is a subsea development expected to start production in the summer of 2004. Lundin Petroleum will, through the acquisition of DNO Britain, assume operatorship of these fields, and will take over responsibility for all DNO's UK employees and its Aberdeen office.
ii) Island Petroleum Developments Limited ("IPDL"), its major asset being the company's 12.5% working interest in the Seven Heads gas field. Gas production from this field, which is operated by Ramco, commenced in December 2003, using the existing Kinsale platform.
Closing of the sale of Norwegian assets is expected in the second quarter of 2004. This transaction covers a 7% working interest in the producing Jotun field, operated by Exxon Mobil, a 15% interest in PL203, PL088B and PL036C, operated by Marathon, including existing oil and gas discoveries that are expected to be developed as part of the West Heimdal project, and various other exploration assets.
The effective date of the above transactions is 1 January 2003, and as previously informed, the total cash consideration is about UDS 165 million, payable at closing. In addition, certain adjustments, estimated at about USD 45 million, will be made for working capital, cash flow generated and/or funding requirement from the effective date of the agreement to its closing.
In addition, Lundin Petroleum AB will provide an abandonment security which will allow for the release of USD 35 million in restricted cash to DNO.
DNO now has received part of the cash settlement and USD 35 million in restricted cash will now be released to unrestricted cash. The company has repaid its ANZ bank loan and has transferred funds to a frozen account for the repayment of a Norwegian bond loan maturing in June 2004.
Reference is also made to the press release from Lundin Petroleum AB.
DNO will retain the following assets:
i) The 10% working interest in the Glitne field.
ii) The Yemeni assets including the 38.95% working interest in Block 32 (Tasour field), the 24.45% working interest in Block 53 (Sharyoof field) and the 50% working interest in block 43. DNO is the operator of the Tasour field and of block 43.
iii) The 80% interest in the Inhaminga Block in Mozambique, of which DNO is operator.
iv) The 5% interest in Block P in Equatorial Guinea.
In addition, DNO in December 2003 was awarded a 60% interest in and the operatorship of PL 305 on the Norwegian shelf, and recently acquired three licence interests in Norway, including a 15% interest in the Goliat field (ref. stock exchange notice dated 2 February 2004).
DNO believes the Lundin transaction releases a substantial part of the value created since DNO's new strategy was launched in 1996, and will give the company the financial strength required to aggressively pursue and create long-term value for its shareholders through investment in new oil and gas projects.
16 February 2004
For further information, please contact:
Group Managing Director
Telephone: (+47) 55 22 47 00 / (+47) 23 23 84 80