The process is expected to kick off in early May, when confidential information packages will be circulated to interested parties to undertake due diligence checks on the business, one of the sources said.
The source added the stake could be valued at up to $550 million.
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 the company’s bondholders.
At the time, the acquisition was seen as the biggest hostile deal by a South Korean firm keen to boost the country’s oil reserves.
A KNOC spokesman said Dana’s stake sale is under way but more details could not be disclosed.
Dana Petroleum and Scotia Bank did not respond to a request for comment.
With an average production of 65,000 barrels of oil and gas per day and 70 percent of operations in the North Sea, the explorer is likely to appeal to private equity funds already operating in the region.
Private equity-backed investors have entered the British oil and gas sector over the past five years, when major oil and gas companies were forced to sell assets, under pressure from a fall in oil prices to near 14-year lows of $26 a barrel in 2016.
Funds including Neptune, backed by Carlyle Group and CVC Capital Partners, and Chrysaor, backed by EIG Global Partners, among others, have since raised billions of dollars to snap up bargains in the sector.
U.S. energy group ConocoPhillips agreed to sell its oil and gas assets in the British North Sea to private equity-backed Chrysaor for $2.68 billion.
U.S. oil major Chevron in July kicked off the sale of its central North Sea oil and gas fields and private equity firm HitecVision is also seeking to sell its British North Sea oil and gas unit Verus Petroleum, which last year completed a string of large acquisitions, industry and banking sources previously said.