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SEOUL – Korea National Oil Corp is prepared to wait for shareholders of UK's Dana Petroleum to respond to its hostile $2.6 billion bid for the firm and won't comment on a report that Dana is seeking a higher offer in return for board approval.

"KNOC is still awaiting shareholder response and continues to believe its offer fully and fairly values Dana," a source close to the matter told Reuters on Monday. The source declined to be named as he was not authorised to speak to the media.

KNOC declined comment.

State-run KNOC launched a hostile 1,800 pence a share offer worth 1.67 billion pounds ($2.6 billion) on Friday after it failed to win Dana's board approval for its proposal, and said it had already received the backing of nearly 50 percent of shareholders.

South Korea has given KNOC a $6.5 billion (4.1 billion pounds) warchest this year to compete with energy-hungry Asian state firms looking to secure supplies for their growing economies.

Chinese and other firms have so far outgunned KNOC, which explores and stores oil, in bigger M&A battles.

Earlier Monday, the Financial Times said in an unsourced report that the Dana board plans to use its interim results on Friday as a platform to stress its value and hoped that the attraction of a board seal of approval would lure KNOC back to the negotiating table with a higher offer.

A recommended deal, structured as a quicker scheme of arrangement vote, could save KNOC the equivalent of about 25 pence a Dana share in costs, the report said.

"KNOC could pay slightly higher to proceed with the deal and as commodities prices are expected to rise further in the next three to four years," said Lee Je-hoon, an analyst at Dongbu Securities.

Biggest hostile acquisition
Investors have said with two months having passed since KNOC's approach, Dana needed to quickly produce another bidder or other material reasons why the bid undervalued the company.

Dana, which has hinted that it is in talks about a major acquisition, is in advanced talks to buy UK North Sea fields from Canada's Suncor Energy, according to sources close to the matter.

The KNOC/Dana deal, if agreed, would be the biggest hostile acquisition by a South Korean firm and biggest-ever deal for KNOC, which purchased Canadian group Harvest Energy last October for $1.7 billion.

KNOC is seeking the backing of 90 percent of Dana shareholders to make a compulsory acquisition of the remaining shares. It is also buy out Dana's convertible bond holders to give a total deal value of 1.87 billion pounds ($2.9 billion).

Shares in Aberdeen-based Dana closed up 6.1 percent at 1,798 pence on Friday.

A deal with Dana would also help KNOC address perceptions of being a timid buyer, created after it lost out to bigger rivals in Asia, mainly in China.

China's largest oil refiner, Sinopec, outbid KNOC for London-listed Addax Petroleum in 2009. Italian group ENI trumped KNOC to snap up UK's Burren Energy in 2007.

KNOC chief executive Kang Young-won, who spent more than three decades with the now-defunct Daewoo Group, is best known for hitting the jackpot with a $5.6 billion Myanmar gas development deal which he helped Daewoo International win while serving as chief executive until 2008.