The Emirati company, Dana Gas, operating in the natural gas sector in the Middle East, announced that its onshore oil and gas-producing assets in Egypt, previously announced in October 2020, would not be sold for up to $ 236 million, including future conditional payments. In addition to preserving the North Arish concession (the sixth sector) for marine exploration.
The decision comes after a number of preconditions for the sale agreement could not be met, to the satisfaction of both parties, before the deadline for completing the sale agreement, which was approved Wednesday, April 14, 2021.
The company expects that there will be a positive impact on its profitability and cash flows, in the coming years, affected by changes in the global economy and energy markets.
The CEO of the company, Patrick Allman-Ward, said: “Dana Gas has always been committed to completing the sale transaction, but it has proven that there are difficulties between the two parties to meet the preconditions for completing the sale agreement. Termination of the sale agreement according to the terms and conditions contained in this agreement.
The UAE Dana Gas Company entered into a binding agreement with the “IPR Al Wastani Petroleum Company Limited”, a subsidiary of “IPR Energy – IPR”, last October, to sell its onshore oil and gas producing assets in Egypt.
The deal included the sale of Dana Gas in its entirety in its four onshore concessions, namely “Manzala”, “West Manzala”, “West Al-Qantara” and “North Salhia”, and the development licenses associated with these areas.
The average production of the concession areas during the first half of 2020, which was included in the deal, was about 31 thousand barrels of oil equivalent per day, and its contribution to the company’s profits before interest, taxes, depreciation, and depletion amounted to 38 million dollars.
Under the terms of the sales agreement:
Transferring ownership rights, responsibilities, and employees to the buyer upon completion of implementation and obtaining formal approval of assignment contracts for various concessions.
The company, through its wholly-owned company, “Dana Gas Egypt”, maintains its shares in the exploration concessions for “Al-Mataria” (Sector 3) onshore and “North Arish” (Sector 6). The company will work to achieve “the largest possible return from these assets and enhance their value.”.
Dana Gas receives compensation that includes a basic cash amount of $ 153 million, including networking capital associated with the assets sold and calculated before any price adjustments at the date of completion of the transaction, as well as conditional payments of up to $ 83 million, linked to average Brent crude prices and production performance during The period between 2020-2023, in addition to the completion of a number of potential business opportunities associated with other parties.
Upon closing, the basic consideration will be adjusted based on the amounts received by the company and the payments made during the transitional period separating the effective date of the agreement and the date of its completion.
The proceeds of the transaction are used to pay off the company’s debts and for Dana Gas’ general corporate use.