SHARJAH / WAM
Dana Gas announced that it has entered into a binding agreement with IPR Wastani Petroleum Ltd, a member of the IPR Energy Group (IPR) for the sale of its onshore Egyptian producing oil and gas assets for a consideration of up to $236 million including contingent payments. IPR is a leading private E&P operator in Egypt, with 9 active concessions, and over 3 decades of expertise in enhancing the recovery of mature producing oil and gas fields.
The company said in a press statement that this asset sale is in line with Dana Gas’ strategic goals of strengthening its balance sheet and focusing on the development of its world class assets in the Kurdistan Region of Iraq (KRI).
Under the terms of the sale, the consideration comprises: a base cash consideration of $153 million, including the net working capital associated with the assets and before any closing adjustments, and contingent payments of up to $83 million subject to average Brent prices and production performance between 2020-2023 as well as the realisation of potential third party business opportunities.
Upon closing, the base consideration will be adjusted by the collections received and payments made by the Company during the intervening period between the effective date, and the closing date.
The transaction, which is subject to a number of conditions precedent and to the Egyptian Ministry of Petroleum and Mineral Resources’ approval, is currently expected to complete early 2021. The proceeds will be used to reduce debt and for general corporate purposes.
Dr Patrick Allman-Ward, CEO, Dana Gas, commented, “Our aim is always to maximise returns to shareholders and optimise our portfolio. The sale of our Egyptian assets forms a key part of this strategy. Completion of the sale process will allow us to strengthen our balance sheet and focus our attention on the development of our world class assets in the KRI, of which our current share of reserves are over 1 billion barrels of oil equivalent, with considerably more resources for realisation and development. The quality of our remaining assets in Egypt are excellent and we retain an interest in two exploration concessions. Our offshore exploration block in particular is highly prospective.
“Over the last 12 years Dana Gas has delivered on a tremendous track record, doubling our 2P reserves in Egypt and increasing our production by 50 percent. Our activities and investments in Egypt’s gas sector have supplied additional gas for power generation displacing heavy fuel oil thereby contributing significantly to the Egyptian economy,” he added.