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Dana Petroleum to buy Petro Canada Netherlands for €328 million

Dana Petroleum PLC (LON:DNX) said it has entered into an agreement to acquire Petro Canada Netherlands BV from Petro Canada (International) Holdings BV, a wholly owned subsidiary of Suncor Energy Inc (TSX, NYSE: SU), for an estimated net cash consideration of approximately €328 million.

Petro Canada Netherlands is an upstream oil and gas exploration and production company operating in the Dutch sector of the North Sea.

Assuming that Dana shareholders approve the deal, Dana currently expects the acquisition to complete in the third quarter of 2010.

In connection with the acquisition, and as part of a broader corporate refinancing initiative, Dana has agreed terms with the Royal Bank of Canada (NYSE:RBC) for the provision of a US$900 million term loan and revolving credit facility to be fully underwritten by RBC.

The acquisition represents the company's largest acquisition to date and the board believes that it provides significant operational and financial benefits, including: providing Dana with a significant growth step in a third core area in Europe and a complementary asset base in the North Sea; and giving it an additional 31 million barrels of oil equivalent (mmboe) of proved and probable  reserves and 51 mmboe of proved, probable and possible reserves as at 31 December 2009 as well as unrisked prospective resources of up to a further  67 mmboe across the Petro Canada Netherlands portfolio (20 mmboe on a risked basis).

Petro Canada Netherlands' net production this year, to end April 2010, averaged 12,136 boepd with the annual maintenance shut-downs on the De Ruyter and Hanze fields yet to occur.

The acquisition will increase Dana's previous 2010 production guidance by some 10-12 percent on an annualised basis, subject to timing of deal completion. Dana estimates that its production will increase by 8,000-9,000 boepd in 2011, equivalent to a 20-25 percent increase in previous guidance for the Dana Group, with a production increase of 10,000-14,000 boepd in 2012 as new projects are brought onstream in The Netherlands.

Dana's total number of producing fields will increase to 54 from 36 currently, this includes 15 new offshore fields and 3 new onshore fields.

Petro Canada Netherlands has interests in a number of currently producing fields, namely the De Ruyter (54.07 percent) and Hanze (45 percent) oil fields which are both operated by Petro Canada Netherlands, the Petro Canada Netherlands operated Hanze gas field (27 percent) and a number of non-operated gas interests in the L05b&c (30 percent) and L08b area (25-30 percent) operated by Wintershall, and the P15 area (9-11 percent) and P18 area (0.7-4 percent) operated by the Abu Dhabi National Energy Company ("TAQA"). In addition, Petro Canada Netherlands has a 12 percent equity interest in the Alkmaar gas storage project operated by TAQA.