KNOC scales back North Sea sale process: sources

LONDON (Reuters) - State-run Korea National Oil Corp (KNOC) has scaled back efforts to pull out of the British North Sea, focusing on the sale of its stake in the Tolmount gas project, three industry sources said.

Heavily indebted KNOC earlier this year tried to sell a 49% stake in its North Sea subsidiary Dana Petroleum but could not find a suitable buyer, the sources said.

In March, KNOC said it was targeting a reduction in its debt-to-equity ratio to 1,200% in 2019 and 500% in 2020.

KNOC is now looking to sell its 50% stake in Tolmount, which is operated by Premier Oil PMO.L, the sources said.

Premier Oil and KNOC both declined to comment, while Dana Petroleum did not immediately reply to a request for comment.

Premier estimates the Greater Tolmount Area to contain around 1 trillion cubic feet of gas. Dana has said its share would produce around 28,000 barrels of oil equivalent a day at peak production.

Earlier this month, Premier announced that its drilling in the Tolmount East section, targeting a further 220 billion cubic feet of gas, was successful.

KNOC bought Aberdeen-based Dana, an exploration and production company with operations across the North Sea, the Netherlands and Egypt, in 2010 for $2.9 billion, including debt. KNOC had hired Canada’s Scotia Bank to market the corporate stake.

With average 2018 production of 65,000 barrels of oil and gas per day and revenue of $1.27 billion, Dana Petroleum has 70% of its operations in the North Sea. Earlier this year it was fined for releasing more than 80 tonnes of chemicals onto the seabed during a drilling operation in 2016.

Additional reporting by Jane Chung in Seoul; editing by David Evans