DANA PETROLEUM plc 

("Dana", "the Company" or "the Group")

Interim Results for the Six Months Ended 30 June 2008

Dana Petroleum, the independent oil and gas exploration and production company focused on growth through international exploration and the development of production in the North Sea and Egypt, reports its interim results for the first half of 2008.  

HIGHLIGHTS

Record levels of Production, Profits and Cashflow

• Record first half production of 43,147 boepd up 67%

• Turnover increased by 188% to a record high of £314.5 million

• Record Pre-tax Profit of £133.1 million up 138%, leading to Earnings Per Share of 69.95p

• More than threefold growth in cashflow from operations to a new high of £193.9 million

• Net debt further reduced to £9.0 million, lowering gearing to below 2%

Highly Successful Exploration Programme 

• 7 wells drilled to date in 2008, yielding 4 new discoveries in North Sea and Egypt

• West and East Rinnes fields proved good quality sands and oil flow rates of 7,800 barrels per day. Rigs now contracted to drill the South-East and South-West Rinnes structures

• First well on West El Burullus, offshore Nile delta, discovered gas with flow rates up to 27 million cubic feet per day. Rig contracted for 3 further wells in this PSC. 

• Exciting 3 well Gulf of Suez drilling programme about to commence. Akhenaton-1 well is first to drill, on the South October PSC

• Drilling site in preparation onshore Morocco at Bouanane, plan to spud by end of year

• Norway  drilling on Fulla target expected fourth quarter 2008 

• Total of 17 wells to be drilled during 2008 with all rigs contracted

Development Programme on Schedule - Ensuring Further New Production Growth

• East Zeit oil production more than doubled through successful new drilling and workovers

• Grouse oil field in Greater Kittiwake Area, first oil scheduled for early 2009

• Babbage gas field in UK Southern North Sea, first gas anticipated Q1 2010

• E18 gas field in Dutch North Sea, first production scheduled for Q3 2009

Outlook 

• Group production for 2008 on target to average between 40,000 and 45,000 boepd, representing more than a 30% growth over 2007

• 10 wells scheduled for second half of 2008

• Total of up to 20 wells expected to be drilled during 2009

• Awaiting results of extensive applications made in the UK 25th Licencing Round

• Evaluating licence applications for Norwegian APA and 20th Licencing rounds

• New production and exploration opportunities being actively pursued

• Company's un-hedged position maximises the benefits from continued commodity price strength

Tom Cross, Chief Executive of Dana, commented:

"Dana's excellent operational performance in the first six months of 2008 has delivered major increases in oil and gas production, profits and cashflow which have all surged to new record highs. The Group is now producing from 30 oil and gas fields and undertaking three new field developments, which will come onstream from 2009. In addition, the Company is working on a further 21 appraisal and potential development projects. 

2008 is the most active year of exploration in Dana's history. A total of 17 wells are scheduled, focused on the UK, Norway and Egypt. Already this year there have been significant new oil discoveries at West Rinnes and East Rinnes in the UK and an important gas discovery at West El Burullus offshore Egypt. Rigs have now been secured to drill a number of additional targets in these particular areas and overall 10 wells are planned in the second half of 2008.

The Company is in a very strong financial position, significantly benefiting from high commodity prices and our unhedged position. With a high quality and balanced portfolio of growth opportunities and an exciting drilling programme ahead, we have every reason to look forward to the future with confidence."

29 August 2008

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  DANA PETROLEUM PLC

Interim Results for the Six Months Ended 30 June 2008

CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT

OVERVIEW

It is pleasing to report that excellent progress has been made across all the key areas of the Company's business during the first half of 2008. This has led to the delivery of record interim results which, on an underlying basis, exceed the results achieved for the 2007 full year.

Group production for the 2008 full year remains on target in the 40,000 to 45,000 boepd range with solid contributions from across the Group's portfolio of 30 producing fields in the North Sea and Egypt. This will represent year-on-year growth of over 30%. Future production growth will be assured by three new development projects, sanctioned during the reporting period, which are all expected onstream from 2009. 

2008 will be the most active year of exploration in Dana's history with 17 exploration and appraisal wells planned for drilling this year. Already in 2008, there have been significant oil discoveries at West Rinnes and East Rinnes and an important gas discovery at West El Burullus. The Company has accelerated the number of exploration wells being drilled whilst remaining focused on building the breadth and quality of its exploration portfolio. Delivery of the extensive exploration programme will continue at the current rate through the rest of 2008 and 2009.

RESULTS

Average working interest production to Dana for the period was up 67% to 43,147 boepd, which allied to the strong commodity price environment resulted in a record Group turnover for the first half of 2008 of £314.5 million. This represented a growth of some 188% over the same period in 2007, and also exceeded the full year out-turn for 2007. Liquids accounted for 69% of total production and gas for 31% which was higher than anticipated and reflects a stronger than expected contribution from the Cavendish gas field in the Southern North Sea. 

Profit before tax for the period was a record £133.1 million compared to £55.8 million for the corresponding period last year, a 138% improvement in the Company's earnings performance. This was after taking a £20.0 million write-down in respect of unsuccessful exploration expenditure. On an underlying basis the first half performance also outstripped the equivalent earnings metric for the 2007 full financial year.

The Group's effective tax rate for the period was 54.6% resulting in a profit after tax of £60.4 million (1H07 : £27.2 million).  Consequently, first half 2008 earnings per share rose sharply to 69.95p (1H07 : 31.81p) an increase of 120%. 

Cash flow from operations increased more than three-fold to a new interim period high of £193.9 million (1H07 : £62.7 million). After investment and financing activity of £109.8 million and £36.2 million respectively, the Group's cash and cash equivalents increased by £26.5 million over the first six months of the year. The Group closed the reporting period with cash and cash equivalents of £142.5 million and reported debt of £151.5 million. The resulting net debt position at the interim stage of just £9.0 million reflects a significant improvement of £62.3 million since the end of 2007 (£71.3 million) and a mid-year gearing ratio of just under 2%. The Company is therefore very well positioned to meet the future capital requirements of its expanding exploration and development programme. 

REVIEW OF OPERATIONS

Production

Average working interest production for the first half of 2008 was 43,147 boepd with 77.7% delivered from the North Sea and the balance from Egypt. This highlights the benefits of a portfolio approach, producing from a total of 30 fields. In the UK, strong contributions came from the Otter and Hudson fields in the Northern North Sea and also from Dana's recently completed developments, the Cavendish and Enoch fields, which were brought onstream in 2007. These fields have exceeded production expectations in the year to date. This mitigated operational issues on the Mallard field in the Greater Kittiwake Area (GKA), which have resulted in this field being shut-in for the past few months pending a planned rig intervention, due to take place in November of this year. The failure of a compressor on the Claymore platform and lower well performance on Johnston also constrained production output from these fields.

There was also excellent performance during this period from the Egyptian fields. Offshore Gulf of Suez, Dana has recently completed drilling the C2 well in the East Zeit field (Dana 100%). C2 was a new well targeting the Nubia, Kareem and Nukhul reservoirs. Good quality sands were found in each reservoir, with over 200 feet of net hydrocarbon bearing sands in the primary Nubia target. The Company has just completed the well and tied it into the production facilities on the East Zeit platform. Initial flowrates are around 5,000 bopd of working interest production to Dana. 

Following completion of C2, the IO3 jack-up rig was moved to workover the C1 well which has successfully added about 2,000 boepd. Encouraged by the success of C2 and C1, Dana is working up opportunities for an extensive long term work programme on the East Zeit field to enhance future production.

The excellent operational performance on wells C2 and C1 is directly attributable to the Dana Egypt team and its industry partners, who working together are building a substantial and valuable business in Egypt.

Having completed C1 the IO3 jack-up rig has moved to drill the Dana operated Akhenaton-1 exploration well in the South October concession (Dana 65%). It will then go on to drill the first well in the South East July concession (Dana 40%). Taken together with further exploration drilling in the Gulf of Suez and likely future infill potential in the East Zeit field, Dana has identified sufficient work opportunities for the IO3 rig in the Gulf of Suez for at least the next 18 months.

There has also been an active development programme in each of Dana's non-operated production concessions in Egypt, which provide attractive upside from low cost developments. In the Western Desert Qarun and East Beni Suef concessions, some 13 workovers have been undertaken so far this year. This is in addition to drilling two development wells and one exploration well. This intensive campaign is building production in each of these concessions. It has also added additional reserves and provided encouragement for pursuing further targets, all at a time of very high oil prices. Activity levels are expected to remain high in the non-operated licences in Egypt for the rest of 2008, with a total of six onshore development wells planned in the Western Desert at the Qarun, East Beni Suef and West Abu el Gharadiq concessions.

Group production for the 2008 full year continues to be on target in the 40,000-45,000 boepd range. The final out-turn production average will be determined by field performance and operational uptime across the portfolio. The Company remains unhedged with respect to its oil and gas sales and continues to gain maximum benefit from the strong commodity price environment.

Development Projects

In 2007, the Enoch and Cavendish fields were brought onstream and production performance to date has exceeded expectations. During the first half of 2008, the Company has progressed three further new field developments :-

• The Grouse oil field in the UK Central North Sea (Dana 50%), with first oil scheduled for early 2009. This project is progressing well and is expected to deliver high value incremental production as a tie-back to the Kittiwake platform. 

• The Babbage gas field in the UK Southern North Sea (Dana 40%) has first gas sales planned for Q1 2010. The GSF Labrador rig has recently been contracted for development drilling, and the first of 3 development wells is expected to commence in early 2009.

• The E18 gas field in the Dutch North Sea (Dana 5%) is being developed as a tie-back to the F16-E platform with first production targeted for Q3 2009. Although a relatively small equity participation, given the link of Dutch gas prices to oil prices and the recent high M&A prices paid for Dutch gas assets, this will nonetheless be a valuable addition to the Dana portfolio.

In addition, Dana, as operator, continues to drive forward the joint Barbara/Phyllis gas field development in UK Central North Sea. Engineering studies focused on host platform selection are progressing well with project sanction expected in the first half of 2009 and first gas scheduled for Q3 2011 to coincide with the expected ullage capacity in the infrastructure systems.

A decision on appraisal of the Christian field in the GKA is expected during the second half of 2008 and commitments have already been made for the long lead items necessary for such drilling.

The Group is working hard to ensure that other potential development projects within its existing portfolio are accelerated to augment future production growth.  In total, there are currently over 20 discovered oil and gas fields being appraised for potential future development.

Exploration and Appraisal

A substantial and balanced programme of drilling for new reserves is central to Dana's business model. This has been achieved by applying extensively for licences in government bid rounds as well as undertaking commercial transactions or asset trades where appropriate to leverage into additional drilling opportunities.

The Company has already drilled a total of seven exploration wells in 2008, with significant discoveries at West Rinnes and East Rinnes in the UK and at West El Burullus, offshore Egypt.  A fourth, smaller oil discovery (at Azhar) was recently made onshore Egypt and is being tied in for production.

West Rinnes and East Rinnes in the Northern North Sea (Dana 100%) proved good quality Brent reservoir sands, excellent quality oil and high flow rates of 7,800 barrels per day. These discoveries are located just 5 kilometres from the Dana operated Hudson producing oil field and 2.5 kilometres from the Company's Melville oil field. The Rinnes discoveries, are now the third and fourth oil fields under Dana's operatorship in this prolific area of the North Sea. Technical evaluation is ongoing, including re-mapping of the Rinnes area following the two wells. Current estimates of the recoverable oil reserves in the Rinnes area are in the range of 50-60 million barrels of oil, depending on the assumptions on used for development scenarios.

Following this initial exploration success, the Company has identified further prospects in this area and has now secured the Stena Spey rig to drill South-East Rinnes in late 2008 and the Byford Dolphin rig to drill South-West Rinnes in early 2009. These two structures each have pre-drill reserve estimates of 10-15 million barrels and have been significantly derisked following the successful drilling on West and East Rinnes. Taking together the Rinnes discoveries, the Melville field, the two near term Rinnes prospects and remain