Dana Gas and IPR Wastani Petroleum Ltd have entered into a binding agreement for the sale of Dana Gas’s onshore Egyptian producing oil and gas assets valued at $236 million including contingent payments.
Per the statement, Dana Gas will proceed with the sale of its 100% working interests in El Manzala, West El Manzala, West El Qantara and North El Salhiya onshore concessions and associated development leases. Dana Gas remarked that throughout H1 2020, these concessions have produced 30,950 barrels of oil equivalent per day (bbloe/d) in addition to adding about $38 million to the company’s EBITDA. Dana Gas Egypt will continue to hold its interests in El Matariya (Block 3) onshore concession and North El Arish (Block 6) offshore concession and maximize their value.
The terms of the sale include cash consideration of $153 million, including the net working capital associated with the assets and before any closing adjustments. Additionally, the sale will include $83 million of contingent payments depending on the average Brent prices and production performance between 2020-2023. Upon closing, the base consideration will be adjusted by the collections received and payments made by Dana Gas during the intervening period between the effective date, and the closing date.
The agreement currently awaits the approval of the Ministry of Petroleum and Mineral Resources and expected to be completed by early 2021.
Dana Gas’s CEO, Patrick Allman-Ward, commented: “Our aim is always to maximize returns to shareholders and optimize our portfolio. The sale of our Egyptian assets forms a key part of this strategy.” He added that, “over the last 12 years Dana Gas has delivered on a tremendous track record, doubling our 2P reserves in Egypt and increasing our production by 50%. Our activities and investments in Egypt’s gas sector have supplied additional gas for power generation displacing heavy fuel oil thereby contributing significantly to the Egyptian economy.”