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Monday, 29 July 2019

Is UAE’s Dana Gas looking to exit Egypt?

Is Dana Gas planning to exit Egypt? Abu Dhabi-listed energy producer Dana Gas is looking to offload its Egyptian assets and has hired investment bank Tudor, Pickering, Holt & Co. (TPH) to advise it on the sale, two unnamed sources close to the matter told Reuters. Dana holds stakes five onshore exploration and production concessions in the Nile Delta and one offshore block in the eastern Mediterranean, together valued at more than USD 500 mn. A company spokesman refused to comment while TPH have yet to respond to inquiries.

North Arish well abandoned: The company said in a bourse filing (pdf) on Sunday that it is abandoning its Merak-1 well in the North Arish concession after failing to find commercial hydrocarbons, but clarified that it is not abandoning the entirety of the concession. According to the disclosure, the concession “contains at least three other independent prospects with material resource potential that are unaffected by the Merak-1 well result.” The field is thought to hold around 20 tcf of reserves, which would make it Egypt’s second biggest after Zohr. Other exploration and production operations in the Nile Delta will continue as usual, the company said.

Are ambitions to list on the LSE behind the decision to exit Egypt? Sources said that the company is looking to focus on its operations in Iraqi Kurdistan prior to a possible listing on the London Stock Exchange. In a separate bourse filing (pdf) on Sunday, the company said that its share of the Khor Mor and Chemchemal fields in Kurdistan (held through a 35% in its Pearl Petroleum JV) are equivalent to around 1 bn boe. The filing claims that this would make the gas fields the biggest in Iraq.

Background: Egypt last month paid the Emirati company USD 38 mn in overdue arrears, reducing its outstanding receivables to USD 125 mn, the lowest level since 2011. Dana Gas’ production climbed 6% y-o-y in 1Q2019 to 68.7k boepd from 65k boepd during the same quarter last year, partly due to an increase in production from its Balsam 8 field in Egypt, the company had said in April.

Speaking of natural gas: US Assistant Secretary of State for Energy Resources Francis Fannon offered to provide support to eastern Mediterranean gas producers at an AmCham event last week, without mentioning specifics. Fannon also said that Egypt will be able to use US labs under the terms of the MoU signed between Oil Minister Tarek El Molla and US Energy Secretary Rick Perry last week. More details on the agreement will be revealed at coming economic forums, Fannon said.

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