Dana Gas Signs GPEA in Egypt
Dana Gas’ wholly-owned subsidiary, Dana Gas Egypt, has concluded a Gas Production Enhancement Agreement (GPEA) with the Egyptian Natural Gas Holding Company (EGAS) and the Egyptian General Petroleum Company (EGPC). This landmark agreement forms the basis for an important development program to eventually increase production from current levels of over 40,000 BOEPD from the Company’s Development Leases in the Nile Delta. Further, Dana Gas Egypt has reached a notable milestone having produced 100 million barrels of oil equivalent in Egypt since it started operations in 2007.
Under the GPEA Dana Gas Egypt will undertake a long term staged work program over a seven year period with project work expected to start in the next few months and first export sales of incremental volumes of condensate following the completion of tie-in activities. As part of its work program, Dana Gas Egypt plans to drill 37 new wells and carry out an equivalent number of work-overs of existing wells. Estimated incremental production during the period will be approximately 270 Billion cubic feet of natural gas, 8 to 9 million barrels of condensate and around 450,000 tons of LPG. Peak production is expected to occur in 2017 with incremental daily production of approximately 160 MMscf gas and 5,600 barrels of condensate.
The GPEA project’s capital investment is planned to be funded by a combination of internally generated funds from Dana Gas Egypt’s operations and project financing.
In addition to enhancing the value of Dana Gas Egypt’s assets into which all of the Company’s GPEA revenues will be dedicated, the GPEA generated revenues will eventually allow reduction of the Company’s Egyptian outstanding receivables of $280 million to nominal levels by 2018, from the proceeds of direct sales of all of the incremental condensate at international market prices.
Dr. Patrick Allman-Ward, CEO of Dana Gas, said: “We are delighted to announce this Gas Production Enhancement Agreement with the Egyptian Government, which is a significant milestone for Dana Gas in Egypt. We believe this to be a great example of public-private partnership in action that will generate significant value to Egypt as the increased production delivers much needed gas to domestic markets. It will also enable us to recover the overdue receivables due to us, unlock the substantial value of Dana Gas’ current Egyptian assets and deliver maximum value to our shareholders in the long term. I would like to recognize the support of the UAE Government and the Egypt Task Force in bringing this Agreement to a successful conclusion. I am also pleased to announce that Dana Gas has just produced its 100th million barrel of oil equivalent in Egypt since it started operations in 2007. This reflects Dana Gas’ long term commitment to the development of Egypt’s energy resources.”
Dana Gas earlier announced that it has been awarded the Blocks 1 and 3 Concession Areas in the onshore Nile Delta. Block 1 represents an extension of Dana Gas' existing successful conventional gas business. Dana Gas will participate in the Block 3 Concession Area on a 50% basis with BP as partner and operator. Successful exploration of the deep Oligocene objective will allow BP to participate in the deep potential in adjacent Dana Gas Development Leases. The Oligocene prospect that will be targeted in Block 3 has multi-TCF exploration potential in a proven hydrocarbon play with a high success rate to date.