Dana Gas exits Egypt … selling assets to IBR for $...

Dana Gas exits Egypt … selling assets to IBR for $...
Dana Gas exits Egypt … selling assets to IBR for $...

Dana Gas said it has agreed to sell its Egyptian onshore oil and gas-producing assets to IBR El Wastani Petroleum, for $ 236 million.

The Emirati company said today, Sunday, that the sale of assets aims to “strengthen its financial position and focus on developing its high-level assets in the Kurdistan region of Iraq.”

IBR is a leading private company in the exploration and production sector of gas in Egypt. It has 9 concession areas and more than three decades of experience in enhancing levels of oil and gas extraction from mature producing fields.

This deal comes as a result of a comprehensive sales plan, which Dana Gas started after conducting a strategic review of its business in Egypt and after entering into negotiations with a number of potential buyers in the second quarter of 2019. As a result, the company received 4 offers to buy.

The negotiations with the party that submitted the best offers continued for a longer period as a result of the restrictions imposed by the “Covid-19” pandemic on travel and communications, and the impact of the pandemic on the global economy, which led to a sharp decline in global oil and gas prices.

The main points of the deal

The deal includes the sale of Dana Gas of all its operating shares in its four onshore concession areas, namely “Manzala”, “West Manzala”, “West Al-Qantara” and “North Al-Salhia”, and the development licenses associated with these areas. During the first half of 2020.

The average production of the aforementioned concession areas was 30,950 barrels of oil equivalent per day, and their contribution to the company’s profits before interest, taxes, depreciation and depletion was $ 38 million.

Property rights, responsibilities and employees will be transferred to the buyer upon completion of implementation and formal approval of assignment contracts for the various concessions.

Through its wholly owned company, Dana Gas Egypt, the company will retain its shares in the exploration concessions of “Al-Matareya” (Sector 3) onshore and “North Arish” (Sector 6). The company will work effectively to achieve the largest possible return on these assets and enhance their value. .

Under the terms of the sales agreement, the consideration that “Dana Gas” will receive includes (1) a basic cash amount of $ 153 million, including net working capital associated with the assets sold and calculated before any price adjustments at the date of completion of the deal, and (2) conditional payments. With a value of $ 83 million, these payments are linked to the average Brent crude price and production performance during the period between 2020-2023, in addition to the completion of a number of potential commercial opportunities associated with third parties.

Upon closing, the basic fee will be adjusted based on the amounts received by the company and the payments made during the transitional period separating the effective date of the actual agreement and the date of its completion.

This deal is subject to a number of preconditions and requires the approval of the Egyptian Ministry of Petroleum and Mineral Resources. It is expected to be completed at the beginning of next year. The financial return from this transaction will be used to pay off the company’s debts and for public institutional use.

In line with the financial disclosures made by most international oil and gas companies, the Covid-19 pandemic has had negative economic effects, and Dana Gas will set aside allocations as a result, and the effect of this will appear during the results of the third quarter of 2020, which will be disclosed to the market after completing this review Results by external auditors.

Dr. Patrick Allman-Ward, CEO of Dana Gas, said: “Our main goal has always been to achieve the greatest return for our shareholders, and the sale of our assets in Egypt is a key part of this strategy. The completion of the sale will enable us to strengthen our financial position and focus our attention on developing our world-class assets in the Kurdistan Region of Iraq, which contain huge reserves of more than one billion barrels of oil equivalent, and these assets contain enormous additional hydrocarbon resources that will be explored and developed in the future. Our remaining assets in Egypt are distinguished by their quality, as we will continue to maintain stakes in two exploration sectors, and the marine exploration sector in particular has high potential. ”

He added: “We have achieved a successful march and tangible achievements since the start of our operations in Egypt 12 years ago, as the volume of our potential and proven reserves has doubled and our production rate has increased by 50% over the years. Moreover, our activities and investments in the Egyptian gas sector played an important role in providing additional supplies of gas to generate power locally instead of using more expensive liquid fuels.

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