UK explorer Dana Petroleum plc announced that its wholly owned subsidiary, Dana Petroleum has signed an agreement with Devon Energy Corporation to acquire Devon’s entire upstream petroleum business interests in Egypt, reported Oil Egypt.
In a statement, Dana’s Chief Executive Officer Tom Cross said, “This deal will deliver significant reserves and a production growth step for Dana and strategically, the acquisition fits closely with our previous Egyptian transactions.”
The deal comprises interests in eight production sharing contracts with 13 producing fields, adding around 12,500 barrels of oil per day to Dana’s output.
“The new portfolio contains a good balance of producing oil fields with numerous attractive drilling opportunities, both on existing fields and within large exploration concessions,” added Cross.
According to the terms of this $375 million deal, Dana is to receive approximately $67 million in working capital in Devon Egypt from the effective date of 1 January 2007, and will pay the net consideration of $308 million in cash via a newly arranged banking facility with ABN AMRO Bank.
Devon announced last November its plan to sell its Egyptian oil and gas assets, which produce about 5,000 barrels of oil equivalent per day. The reason behind this decision, as stated by the company, is to focus “on regions that can better provide meaningful growth.”
“Our decision to exit Egypt is primarily a matter of focus,” said Stephen J. Hadden, senior exploration and production vice president, in a statement last November. “Devon’s strategy continues to be to concentrate our resources in areas that can provide meaningful future growth in companywide production and value. Although we have established a solid production base and hold a sizable suite of exploration opportunities in Egypt, we believe we can redeploy our resources from Egypt to projects in and outside North America that better fit our focused growth strategy.”
During 2006, Devon Egypt had working interest production of approximately 12,300 barrels per day, and USGAAP operating profits of approximately $53 million. At the end of 2006 gross assets were approximately $242 million.

(Oil Egypt, Upstream Online and Daily Star Egypt)