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The Korea Herald
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THE INVESTOR
March 19, 2024

Industrials

Debt-ridden KNOC to sell UK-based Dana Petroleum

  • PUBLISHED :January 15, 2019 - 15:34
  • UPDATED :January 15, 2019 - 15:34
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[THE INVESTOR] Troubled Korea National Oil Corp. is poised to sell more overseas assets -- this time, Dana Petroleum -- to cut down on debts and improve its financial health, industry sources said on Jan. 15.

State-run KNOC, which has declared 2019 as “the year of emergency management,” is currently selecting a manager to sell 30 percent in UK-based Dana. It has received 10 proposals from investment banks including Goldman Sachs, JP Morgan and Morgan Stanley, the sources said.

Considering Dana’s book value of 1.99 trillion won (US$1.77 billion) as of end-2018, the 30 percent stake deal would be estimated at 600 billion won, analysts said. 



KNOC took over the UK explorer in 2010 for US$2.91 billion in a hostile acquisition. It was part of the “resource diplomacy” carried out during the Lee Myung-bak administration between 2008 and 2013.

Some of the overseas assets KNOC acquired during that period, including Canada’s Harvest Operations Corp., have not been doing well and consequently are weighing down on its financial soundness. Dana, which produces 66,000 barrels a day, slipped into the red in 2014.

The debt-equity ratio of KNOC has been on the rise in recent years as the firm struggled from bad investment decisions and declining oil prices. The ratio was 453 percent in 2015, followed by 529 percent and 700 percent in the subsequent years. As of the first half of 2018, the ratio stood at 939 percent. The total amount of debt outstanding reached over 17 trillion won for the whole of last year.

KNOC is also in the process of selling its stake in US-based Eagle Ford Shale Play. It acquired a 23.67 percent stake in the gas field for 1.75 trillion won in 2011.

During a parliamentary inspection of the administration last year, a lawmaker insisted that KNOC overpaid for the Dana acquisition by as much as 1 trillion won. There is also criticism that Dana’s total reserves are estimated at 153 million barrels as of March 2018, far short of KNOC’s assessment of 360 million barrels back in 2011.

By Park Ga-young (gypark@heraldcorp.com)

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