EGYPT – Dana Gas, a publicly traded natural gas company, has announced that it has entered into a binding agreement with IPR Wastani Petroleum, a member of the IPR Energy Group (IPR), for the sale of its onshore Egyptian producing oil and gas assets for a consideration of up to US$236 million including contingent payments.
This transaction is the result of a comprehensive formal sales process initiated pursuant to a strategic review of the Company’s Egyptian business and follows engagement with several prospective industry buyers commencing in Q2 2019.
This resulted in four offers being received. Negotiations with the successful bidder extended over a longer period primarily due to the restrictions that COVID-19 placed on travel and communications and the impact of the pandemic on the world economy and the resulting sharp drop in global oil and gas prices.
This asset sale is in line with Dana Gas’ strategic goals of strengthening its balance sheet and focusing on the development of its world class assets in the Kurdistan Region of Iraq (KRI).
“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. 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, Dana Gas, said.
“The quality of our remaining assets in Egypt are excellent and we retain an interest in two exploration concessions. Our offshore exploration block in particular is highly prospective. 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%.
The Company, through its wholly-owned subsidiary Dana Gas Egypt, will retain its interests in its onshore and offshore exploration concessions, respectively El Matariya (Block 3) and North El Arish (Block 6), and will actively pursue maximizing the value of these assets.
The transaction, which is subject to several conditions precedent and to the Egyptian Ministry of Petroleum and Mineral Resources’ approval, is currently expected to complete early 2021. The proceeds will be used to reduce debt and for general corporate purposes.