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, the sources said.

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.

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 over 80 tonnes of chemicals onto the seabed during a drilling operation in 2016.

KNOC had hired Canada's Scotia Bank to market the corporate stake.

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

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

By Shadia Nasralla and Ron Bousso