Deal, to be completed in 2021, priced at $236 mn
SHARJAH/October 25-2020: Dana Gas said it has entered into a binding agreement with IPR Wastani Petroleum Ltd for the sale of its onshore Egyptian producing oil and gas assets for a consideration of up to $236 million (AED866.12 million) including contingent payments.
IPR Wastani is Petroleum Ltd a member of the IPR Energy Group (IPR), which is a leading private E&P operator in Egypt, with 9 active concessions, and over 3 decades of expertise in enhancing the recovery of mature producing oil and gas fields.
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 a number of prospective industry buyers commencing in the second quarter (Q2) of 2019. Four offers have been 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,” a statement from the company said.
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).
Transaction Highlights
The perimeter of the transaction includes Dana Gas’ 100 per cent working interests in the El Manzala, West El Manzala, West El Qantara and North El Salhiya onshore concessions and associated development leases.
In the first half of 2020, these concessions produced 30,950 barrels of oil equivalent per day, and contributed $38 million to the company’s EBITDA.
The company statement also explained that the transfer of ownership, responsibilities and staff, will take place upon execution and formal approval of the deeds of assignment for the various concessions.
The company, through its wholly-owned subsidiary Dana Gas Egypt, will retain its interests in its onshore and offshore exploration concessions – El Matariya (Block 3) and North El Arish (Block 6) respectively, and will actively pursue maximising the value of these assets.
Dr Patrick Allman-Ward (seen in the picture), CEO, Dana Gas said the company’s aim is always to maximize returns to shareholders and optimise its portfolio. He said the sale of its Egyptian assets forms a key part of the company’s 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 is over 1 billion barrels of oil equivalent, with considerably more resources for realisation and development,” Allman-Ward added.
Under the terms of the sale, the consideration comprises (i) a base cash consideration of $153 million, including the net working capital associated with the assets and before any closing adjustments, and (ii) contingent payments of up to $83 million subject to average Brent prices and production performance between 2020-2023 as well as the realization of potential third party business opportunities. Dana statement said that upon closing, the base consideration will be adjusted by the collections received and payments made by the company during the intervening period between the effective date, and the closing date.
The transaction, which is subject to a number of conditions precedent and to the Egyptian Ministry of Petroleum and Mineral Resources’ approval, is currently expected to complete early 2021.
