CAIRO: Dana Gas PJSC has entered into a binding agreement with IPR Wastani Petroleum Ltd. for the sale of its onshore Egyptian oil and gas assets for up to $236 million, including contingent payments.
As part of the transaction, Dana Gas is selling its full operative shares in its four onshore concession areas of El Manzala, West El Manzala, West El Qantara and North El Salhiya, and their associated development licenses.
The production rate in the four concession areas amounted to 30,950 barrels of oil equivalent per day in the first half of 2020. It contributed $38 million before interests, taxes, consumption, and depletion to the company’s profits during the same period. Transfer of ownership, responsibilities and staff will take place upon finalization and formal approval of deeds.
The UAE company, through its wholly owned subsidiary Dana Gas Egypt, will retain its interests in its onshore exploration concession in El Matariya and offshore exploration concession in North El Arish.
CNBC reported that Dana Gas UAE will actively attempt to maximize the value of these remaining assets.
The sale comprises of a base cash consideration of $153 million, including networking capital associated with sold assets and before any price closing adjustments, and contingent payments of up to $83 million subject to average brent crude prices and production performance between 2020 and 2023.
Dana Gas is also set to obtain a number of potential trade opportunities linked to other parties. The base consideration will be adjusted according to collections received and payments made by the company during the transitional period between the effective date and closing date.
The transaction is subject to several prerequisites. It also requires the approval of the Egyptian Ministry of Petroleum and Mineral Resources. It is expected to be finalized by the beginning of next year. The financial return of the transaction will likely be allocated towards paying company debts and public institutional benefits.
Dana Gas CEO Dr. Patrick Allman-Ward said: “Our constant aim is to achieve the highest return for our shareholders.”
The new deal is a key part of the company’s ambitions, he added. Finalizing the transaction will boost the UAE giant’s financial status, allowing it to transition towards developing its assets in Iraq’s Kurdistan region.
Kurdistan contains huge reserves of oil and hydrocarbon resources that will be explored and developed in the future.
The remaining Egyptian assets will remain productive, with the offshore exploration sector in particular likely to see huge growth in the future.
IPR is a leading company in the field of gas exploration and production in Egypt with over nine concession areas and more than 30 years of experience.