Dana Gas announces sale of Egypt assets to IPR for $236 million

Ahram Online , Sunday 25 Oct 2020

The transaction remains pending the Egyptian government approval, and is expected to be finalized in early 2021

UAE's Dana oil rig, Egypt (Photo: Courtesy of Dana Gas website)

UAE-based energy firm Dana Gas announced the sale of its onshore assets in Egypt for as much as $236 million, allowing it to repay debt associated with Islamic sukuk (Islamic sharia bonds), which expires in October, and focus on its leading operations in Iraq's Kurdistan (KRI).

According to an official statement, the transaction entitles Dana Gas to receive $153 million, including the net working capital associated with the assets before any closing adjustments, and contingent payments of up to $83 million depending on global oil prices for the sale to IBR Energy Group.

The transaction includes Dana Gas’ full working interests in El-Manzala, West El-Manzala, West El-Qantara, and North El-Salhiya onshore concessions and associated development leases.

IPR Energy's unit IPR Wastani Petroleum, one of the four bidders seeking the assets, will buy all of Dana Gas' assets in the country, which produced 30,950 barrels of oil per day in the first half of 2020.

However, Dana Gas will retain its interests in its onshore and offshore exploration concessions in El-Matariya (Block 3) and North El-Arish (Block 6), respectively.

The anticipated sale, which Dana Gas has pushed for to avoid a third restructuring of debt, comes after negotiations were extended due to restrictions placed to counter the coronavirus, and the impact of the pandemic on global economy and oil and gas prices.

The transaction remains pending the Egyptian government's approval, and is expected to be finalized in early 2021. Its proceeds will be used to "reduce debt, and for general corporate purposes".

"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 realization and development," Patrick Allman-Ward, CEO of Dana Gas said.

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