Dana Gas signs landmark agreement in Egypt

01/10/2014 01:03 AST

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.

The Gulf Today