Oil and gas exploration company Dana is raising £25.5 million sterling (€40.7 million) to fund ongoing exploration.

The fundraising will take place through a placing and open offer at 12.25p sterling per share.

The funds raised will be used for ongoing exploration.

The shares are being offered at a small 3.9 per cent discount to Wednesday's 12.75p closing price and the issue is fully underwritten by Investec Bank (UK).

In the placing and open offer to raise £20 million before expenses, existing shareholders are being offered two new shares for every 11 shares they hold.

In the "cash placing", the company is raising about £5.5 million through the placing with institutional investors.

The company plans to raise £24 million in total, after expenses.

The placing and open offer will involve the issue of 163,338,224 shares.

Existing shareholder Innogy Holdings has given an irrevocable undertaking not to take up its entitlement to 14,720,916 shares under the open offer.

In the cash placing, Dana will issue 44,897,959 new shares.

The full share offering has been taken up by the company's 30 to 40 institutional shareholders with a clawback in place to allow the 16,000 small shareholders take up their shares in the two-for-11 offer, according to chief executive Mr Tom Cross.

Institutional shareholders own 70 to 80 per cent of Dana.

The funds raised will be used to appraise and initiate, where appropriate, development of recent discoveries, to finance continuing exploration and to enhance group assets through acquisition or exchanges, he said.

"We recently completed the drilling of 10 wells and made eight discoveries, four in the North Sea, three off Indonesia and one in west Africa.

"We are about to start new projects in the North Sea and west Africa.

"Our institutional shareholders wanted us to carry on drilling and appraising our discoveries without taking partners at this stage which would dilute the interests of existing shareholders," Mr Cross added.

Dana has said it would consider increasing its stake in these discoveries before development if this was commercially attractive.

Dana, which will report first-half results at the end of September, reported pre-tax profits of £7.4 million sterling for 2000 on a turnover of £29.9 million.

This represents an increase from a 1999 profit figure of £6.4 million on a £20.7 million turnover.