Sharjah based Dana Gas has formally announced the sale of its 100% working interests in the El Manzala, West El Manzala, West El Qantara and North El Salhiya onshore concessions and associated development leases in Egypt.
Dana Gas 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 property on sale produced 30,950 barrels of oil equivalent per day, and contributed $38Million to the Company’s EBITDA in the first half of 2020, the company says. Transfer of ownership, responsibilities and staff to the buyer of the assets will take place upon execution and formal approval of the deeds of assignment for the various concessions.
The beneficiary of the sale is IPR Wastani Petroleum Ltd, a member of the IPR Energy Group to whom Dana Gas is selling for a consideration of up to $236Million. The two parties have entered into a binding agreement with including contingent payments. Under the terms of the sale, the consideration comprises (i) a base cash consideration of $153Million, including the net working capital associated with the assets and before any closing adjustments, and (ii) contingent payments of up to $83Million subject to average Brent prices and production performance between 2020-2023 as well as the realization of potential third party business opportunities. 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. The proceeds will be used to reduce debt and for general corporate purposes. Consistent with this reported actions this year by most international oil and gas companies, the COVID-19 pandemic and associated negative economic effects, Dana Gas will take an impairment in Q3 2020 which will be disclosed to the market following review by the external auditors as part of the Q3 financial results.