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Dana Gas commences drilling gas well in Egypt.

Firm can sell government's share of condensate at market rates.

Abu Dhabi: Abu Dhabi-listed Dana Gas has commenced drilling the Balsam-2 development well in the Balsam Development lease onshore Nile delta in Egypt.

"The well will be the first horizontal well drilled by Dana Gas Egypt, and one of very few drilled in the onshore Nile Delta to date," the energy company said in a regulatory filing to Abu Dhabi Securities Exchange on Sunday.

"The well is expected to take approximately four months to drill and complete. The Balsam-2 well is the first in a major drilling campaign of some 30 wells and a large number of work-overs that will be drilled in the next three years. It forms part of the Gas Production Enhancement Agreement (GPEA) work commitment," the oil and gas company said in a statement.

In this agreement, Dana Gas has committed to a work programme in return for the ability to sell the government's share of incremental condensate production at market rates. This mechanism is expected to effectively eliminate the receivables balance by end of 2018, assuming that no further bullet payments are made to the petroleum sector by the Egyptian government.

On Sunday, Dana Gas shares opened at Dh0.43 and after touching a high of Dh0.44 closed at Dh0.43. A total of 149.32 million changed hands.

The company's earnings dropped 73 per cent year-on- year to $12 million for the first quarter of 2015 from $45 million. The gross revenue was lower by 36 per cent at $115 million as compared to $180 million in the same period last year, on lower oil prices.

On June 2, the company signed a deal allowing BP to carry Dana Gas for the drilling of a first exploration well in the El Matariya onshore concession area, Nile Delta in Egypt, which was awarded to BP and Dana in the EGAS 2014 International Bid Round.

Under the terms of the agreement, BP as operator will carry Dana Gas for its 50 per cent share of the cost of the well, subject to an agreed cap of $39 million.

Dana Gas has exploration and production assets in Egypt, Kurdistan region of Iraq and the UAE, with an average output of 68,900 boepd in 2014.

Dana Gas, via its subsidiary Dana Gas Egypt, owns a 100 per cent interest in three concessions onshore Nile Delta, the El Manzala, West El Manzala and West El Qantara concessions.

The concessions now consist of 14 development leases with gas and condensate production from 12 fields, and with a further two fields in development.

Current gas production is about 190 MMscf/day and 4800 bbls/d condensate.

Dana Gas has an active development programme consisting of a three-rig well programme and additional plant upgrades that will take gas production to 240 MMscf/d and condensate production to 7000 bbbls/d by 2016.

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Publication:Khaleej Times (Dubai, United Arab Emirates)
Geographic Code:7UNIT
Date:Jun 7, 2015
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