Dana Gas has made a clear statement regarding the settlement of the arbitration case with RWE in a disclosure to ADX on the 30th November 2015.
In that disclosure DG informed the market “of its reaching an amicable and mutually beneficial settlement agreement with RWEST to address all claims and bring the arbitration to a close” and further that, “as part of the settlement, RWEST Middle East has also joined the Pearl Petroleum consortium as a full partner for 10%.”
Any monetary amounts referred to by third parties and set out in the Enquiry are speculative as the settlement is and remains confidential to the parties.
The financial impact of the settlement will be disclosed in the next Quarterly Financial Report as required under the Listed Company Disclosure Obligations of the ADX.
End
Following the disclosure made by Dana Gas PJSC on 29 November 2015 with regard to the international arbitration case it filed in October 2013, along with Crescent Petroleum and Pearl Petroleum Company Limited (together the ‘Consortium’), before the London Court of International Arbitration (‘LCIA’) in relation to their long-term contract with the Kurdistan Regional Government of Iraq (‘KRG’), the Abu Dhabi Stock Exchange (“ADX”) instructed the Company to further clarify to the market the total value of the claims and rulings made in the said arbitration.
In response to the ADX instruction, Dana Gas PJSC wishes to clarify that the Arbitral Tribunal issued on 27 November 2015 a Second Partial Final Award (‘Second Award’) ordering the KRG pay to the Consortium within 28 days the sum of US$ 1,981,951,322 (approx. US $1.98 Billion) for outstanding unpaid invoices for the produced condensate and LPG up to 30th June 2015, as per the pricing methodology already determined previously by the Tribunal.
The Second Award is binding and internationally enforceable, and does not depend upon the further hearings of claims and counter-claims by the parties to the arbitration. The Company wishes to clarify to the market that the Consortium’s remaining claims are estimated at over $11 (Eleven) Billion principally for wrongful interference with the Consortium’s long term rights over the Khor Mor and Chemchemal fields (as affirmed by the First Award). These claims will be heard and determined, together with the KRG’s counter-claim for “more than US$ 3 Billion”, in the arbitration hearing planned to be held next year.
Dana Gas has to date not received any sums under the English High Court Judgment of 20 November 2015 or the Second Award made by the Tribunal on 27 November 2015.
End
In relation to the arbitration dispute between Dana Gas PJSC, Crescent Petroleum and RWE SUPPLY & TRADING GmbH (RWEST), with LCIA Arbitration Nos. 101759 and 101760, Dana Gas would like to inform the market of its reaching an amicable and mutually beneficial settlement agreement with RWEST to address all claims and bring the arbitration to a close.
The detailed terms of the settlement agreement are to be treated in accordance with the confidentiality provisions of the arbitration dispute resolution rules.
As part of the settlement, RWEST Middle East has also joined the Pearl Petroleum consortium as a full partner for 10%.
Dana Gas and its consortium partners are committed to working together with the KRG in order to realise the full potential of the significant resources in the Khor Mor & Chemchemal fields for the benefit of the Kurdistan Region and Iraq, as well as the wider region.
Dana Gas PJSC wishes to further update the market with regard to the international arbitration case it filed in October 2013, along with Crescent Petroleum and Pearl Petroleum Company Limited (together the ‘Consortium’), before the London Court of International Arbitration (‘LCIA’) in relation to their long-term contract with the Kurdistan Regional Government of Iraq (‘KRG’).
Following the hearing that took place in London before the LCIA Tribunal on 21st September 2015, the Tribunal on the 27th of November 2015 issued a Second Partial Final Award (‘Second Award’) ordering that the KRG pay to the companies within 28 days the sum of US$ 1,981,951,322 (US Dollar One Billion, Nine Hundred Eighty One Million, Nine Hundred Fifty One Thousand, Three Hundred and Twenty Two only) for outstanding unpaid invoices for the produced condensate and LPG up to 30th June 2015, as per the pricing methodology already determined previously by the Tribunal. This Award is final, binding and internationally enforceable, and does not depend upon any further hearings or claims and counter-claims by the parties to the arbitration.
This Award follows the Partial Final Award made by the Tribunal on 2nd July 2015, which confirmed the Consortium’s exclusive long-term rights to develop and produce gas and petroleum from both the Khor Mor and Chemchemal fields for not less than 25 years. (These rights had previously been disputed by the KRG since May 2009, preventing the proper and timely development of the fields). The Consortium’s further substantial damage claims for wrongfully delayed development of the fields will be heard in 2016, along with the remaining counter-claims of the KRG (though the Tribunal found that these provided no basis for postponing this Second Award for payment of the full amount due within 28 days).
Dana Gas and its Consortium partners have invested over $1.2 billion so far and produced over 150 million barrels equivalent of gas and petroleum liquids, which has had a transformative positive effect on the local economy in the Kurdistan Region and in particular in providing gas to fuel affordable electricity supply. The companies sincerely hope that contractual commitments, as confirmed beyond any doubt by the Tribunal’s findings and clear Award, will now be adhered to so that these world class hydrocarbon resources can be further properly developed for the benefit of the people of the Kurdistan Region and all of Iraq.
Kurdistan Arbitration Update – High Court of England ruling
Dana Gas PJSC today updates the market in regards to the international arbitration case it filed in October 2013, along with Crescent Petroleum and Pearl Petroleum Company Limited (together the ‘Consortium’), before the London Court of International Arbitration (‘LCIA’).
As previously disclosed on 15 December 2014, the LCIA Tribunal on the 17 October 2014 ordered the KRG to pay the Consortium US$100 million within a timeframe of 30 days by way of a second interim order. In default of the Tribunal’s Order, the KRG failed to make payment by the stipulated deadline of 17 November 2014 and therefore, the Tribunal’s order became peremptory in nature, enabling its enforcement by the High Court of England.
With the Tribunal’s permission, on 12th December 2014, an application to the High Court was made for enforcement of the order.
The Peremptory Order was heard in the High Court on 28-29 October 2015. Following this, on 20 November 2015, the High Court handed down its decision to enforce the LCIA Arbitral Tribunal’s Peremptory Order of 17 October 2014 to pay the Consortium US$100 Million (AED 367 million) within 14 days.
The process and judgment from the English High Court is in parallel to but separate from the main arbitration process before the LCIA Tribunal.
– 9M 2015 revenue is US$324 million and net profit is US$10 million
– Average quarterly production remains above 60,000 boepd
– An estimated 165 Bcf of 2P gas reserves were added from the Balsam-2 development well and the Balsam-3 exploration well in the Nile Delta, Egypt; part of the GPEA investment programme that will boost production by an estimated 35 MMscf/d of raw gas in 2016
– UAE Zora Gas project nearing completion, will add 10% upside to group production
– Ongoing focus on cost management and prudent utilisation of cash
Dana Gas, the Middle East’s largest regional private sector natural gas company today announced its financial results for the nine months and third quarter ended 30 September 2015.
An extended period of low prices, which is affecting earnings across the sector, combined with a consistently challenging global economic environment, has resulted in the Company reporting nine months 2015 gross revenues and net profit of US$ 324 million and US$ 10 million respectively, as compared to US$ 541 million and US$ 129 million in the same period 2014.
Average production in the third quarter 2015 was 60,800 barrels of oil equivalent per day (boepd). Dana Gas Egypt is pleased to report a significant gas discovery at Balsam-3, and that it has proved up additional 2P reserves with the Balsam-2 development well, both located in the Balsam Developmental Lease in the Nile Delta region. Preliminary estimates have put the additional 2P reserves at 165 billion cubic feet (Bcf) of gas, equivalent to 28 million barrels of oil equivalent.
Dana Gas has continued to drive further cost reductions during the third quarter. Since the beginning of the year the Company has cut US$ 5 million in costs by lowering G&A as well as reducing the workforce in quarter four 2015. Furthermore, because of early conversions on the convertible sukuk in early 2014, the Company has saved approximately US $4 million in interest payment during 2015. This has resulted in a company better positioned to operate in a low oil price environment going forward.
Dr Patrick Allman-Ward, CEO Dana Gas, said:
“In the Nile Delta, we are pleased to announce the outcome of two successful wells in the Balsam Development Lease. Both Balsam 2 and 3 wells had excellent results and initial estimates indicate a 2P reserve addition of about 165 Bcf, with a high condensate yield. The wells open up further development potential that will be pursued in 2016. We expect first production from the Balsam Field to come on stream before the end of the year. This is also the first gas resulting from our new investment program linked to the Gas Production Enhancement Agreement signed with the Egyptian government in August 2014. It represents a notable milestone as we start to add incremental production, generate additional revenues and reduce our outstanding receivables position.”
“The market remains extremely tough on producers but Dana Gas continues to be resilient and our focus on managing our cost base is yielding positive results. It has helped us to partially offset the low oil price environment and reduction in production to post a nine-month net profit of US$ 10 million.”
Financials
The Company reported third quarter gross revenue of US$ 93 million as compared to US$ 174 million and an overall net loss of US$ 9 million versus a net profit of US$ 38 million in the third quarter 2014 principally due to lower prices but also to lower production. The average realised price of condensate and LPG in the first nine months of 2015 was US$ 53 and US$ 37 respectively, a decline of approximately 50% on 2014 prices.
Cash and bank balances, as of 30 September 2015, stood at US$ 142 million, a 23% decline as compared to 31 December 2014, because of ongoing capital expenditures in Egypt related to the Gas Production Enhancement Agreement activities (GPEA) and the Zora project in the UAE, together with the regular Sukuk profit payments.
Cash collections from Egypt in the first nine months 2015 stood at US$ 53 million and Kurdistan Region of Iraq (KRI) at US$ 36 million. During the third quarter, the Company realised US$ 41 million from the sale of its MOL shares.
Production and Development
The Company saw its share of production in Q3 2015 decrease by 11% to 60,800 boepd from 68,700 boepd, due primarily to natural declines in the Nile Delta fields in Egypt.
Egypt
Dana Gas Egypt recorded 32,144 boepd of production over the third quarter of 2015, a decline of 21% from an average of 40,500 boepd in Q3 2014. This is in line with the annual average decline rates for Nile Delta fields and will be offset once the Balsam Field comes on stream.
The Balsam-2 and Balsam-3 wells were both drilled to depths greater than 3500 metres. The Balsam-2 well encountered 78 m of net pay in excellent quality reservoir in the primary Qawasim (QP2) objective, the longest gas column yet penetrated in the Company’s history. The well will be completed with a 700 metre horizontal section, the longest drilled in the onshore Nile Delta to date, in order to maximize recoverable volumes. The Balsam-3 well encountered 34 m of net pay in the QP2 reservoir with no gas-water contact logged. An additional 11 m of net pay was encountered in the shallower secondary QP1 objective in both Balsam-2 and Balsam-3.
The Balsam Field, through Balsam-1 and -2 will be brought on-stream before the end of the year, and Balsam-3 will be tied into the El Wastani plant in 2016. These successful wells have de-risked the western part of the Development Lease and has created the opportunity for an additional three exploration and development wells to be drilled in 2016.
Kurdistan Region of Iraq
Dana Gas’s share (40%) of gross production in the KRI in Q3 2015 was 28,000 boepd, compared to 27,700 recorded in the third quarter 2014.
UAE – Zora Gas Project
Dana Gas continues to make progress on its Zora Gas Field project. The last quarter has seen the well completed and cleaned up. All construction works for the onshore plant were completed and the pre-commissioning and commissioning works commenced. Production capacity will be approximately 40 MMscf/d gas (6,650 boepd). First gas is due on-stream before year end.
Receivables
As at 30 September 2015, Dana Gas’ total receivables were US$ 1.071 billion (31 December 2014: US$ 992 million).
In Egypt, during the first nine months of 2015, the Company received cash of US$ 53 million whilst offsetting US$ 13 million against the signature bonus for Block 1 and 3 and US$ 3 million of payables to government-owned contractors. As at 30 September 2015, trade receivables stood at US$ 252 million (31 December 2014: US$ 233 million).
In the KRI, Dana Gas’s share of cash collections for the first nine months of 2015 stood at US$36 million. Upon expiry of the direct local sales contracts, the KRG has commenced lifting of LPG from 20 September, and condensate from 7 October 2015, direct from the Khor Mor plant through local contractors. As at 30 September 2015, the trade receivable balance stood at US$ 804 million (31 December 2014: US$ 746 million).
Kurdistan Arbitration Update
On 21 September 2015, a one-day hearing was held during which the Claimants made an application to the LCIA Tribunal for a final monetary award against the KRG for outstanding unpaid invoices for produced condensate and LPG calculated as per the pricing methodology determined by the Tribunal on the 30th June in its Partial Final Award. The Tribunal considered the parties’ claims and their submissions made on the day. The Tribunal will inform the parties of its ruling in due course.
-ENDS-
About Dana Gas
Dana Gas is the Middle East’s first and largest regional private sector natural gas company established in December 2005 with a public listing on the Abu Dhabi Securities Exchange (ADX). It has exploration and production assets in Egypt, Kurdistan Region of Iraq (KRI) and UAE, with an average output of 68,900 boepd in 2014. With sizeable assets in Egypt, KRI and the UAE, and further plans for expansion, Dana Gas aims to play an important role in the rapidly growing natural gas sector of the Middle East, North Africa and South Asia (MENASA) region.
Dana Gas Q3 2015 Earnings Conference Call
Monday, November 16, 2015 at 4:00 pm (UAE), 7:00 am (New York) and 12:00 pm (London)
Speakers:
Dr. Patrick Allman-Ward, Chief Executive Officer
Senior Management Team
Host:
Ziad Itani, Arqaam Capital
Please connect to the following Audio and Web session at least 10 minutes before the beginning of the Event:
Audio Connection details:
Please note that no voice will be channeled through the PC.
UAE-Toll Free 8000 3570 2592
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UK-Toll +44 20 3427 1907
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Passcode: 1132046
Web-cast Connection details:
Please note there will be a presentation being displayed on the PC.
To view the presentation, please follow the link below and join the web meeting.
Web Audience URL:
http://arqaamdanagas161115-live.audio-webcast.com
We earlier disclosed on 5th August 2015 that we have been advised by Dana Gas PJSC (the “Company” and “Obligor”) of the buyback of US$12.1 million 9% Ordinary Sukuk Reg S (the “Ordinary Sukuk”) of the Issuer. . Following this, the Obligor has advised the Issuer that the Ordinary Sukuk has been delivered to Deutsche Bank AG, London Branch (in its capacity as “Principal Paying Agent”) on 24th August 2015 and has since then been cancelled.
Further, we have been advised by the Obligor that in August 2015, an additional buyback of US$12.8 million Ordinary Sukuk and US$2.2 million of 7% Exchangeable Sukuk – Reg S (“Exchangable Sukuk”) of the Issuer has taken place.
The total cumulative Ordinary and Exchangeable Sukuk buyback is therefore currently at US$27.1 million.
We understand that the Obligor will be delivering US$15 million of the additionally bought back Sukuk (both Ordinary and Exchangeable) as referred above, in due course, to the Principal Paying Agent to have the same cancelled in accordance with the terms and conditions of Sukuk documents.
DANA GAS Q2 REVENUES REACH $116 MILLION
Company profitable despite steep fall in oil prices since last year
Cashflows steady from Egypt and Kurdistan, Zora project to commence soon
– Increased production expected in H2 2015 due to GPEA operations in Egypt and Zora production
– Drilling commenced on Balsam-2 and Balsam-3 in Egypt
– Block-3 partner agreement onshore Nile Delta signed with BP
– First gas production at Zora gas field to commence in H2 2015
Dana Gas, the Middle East’s largest regional private sector natural gas company today announced its financial results for the second quarter ended 30th June 2015:
The Company reported revenues of US$116 million despite the sharp decline in global oil prices since a year ago. Net profit after tax which was US$7 million with cash and cash equivalent at US$132 million, after additional investments in new projects in Egypt and the implementation of the Zora project in the UAE. Total assets grew to US$ 3.729 billion.
Operationally, Dana Gas commenced drilling work on the Balsam-2 development well and Balsam-3 appraisal well in Egypt, which represent the first operations of a major drilling and work-over campaign as part of the Gas Production Enhancement Agreement (GPEA) work commitment. The Company has also completed a Participation Agreement with BP for drilling one exploration well in El Matariya Onshore Concession (Block 3). In the UAE, work on the Zora Gas field project is progressing, with the first gas expected to come on-stream in the second half of 2015. Together, these factors are expected to translate into increased production for Dana Gas over the coming period.
“Despite the steep fall in global oil prices over the past year and events in the region, Dana Gas has remained profitable and strengthened its operations with new investments,” said Dr. Patrick-Allman Ward, CEO of Dana Gas. “We are looking forward to additional production and cash generation in the second half of the year from our new investment program in Egypt which is now under way as well as from our Zora field in the UAE coming on-stream. With our continued cost discipline and this expected increase in production, Dana Gas is well positioned to benefit from any improvements in the oil price in the future,” he added.
Dana Gas maintained steady cash-flows from Egypt and Kurdistan operations, and also received an important ruling on the last day of the quarter from the international arbitration with the Kurdistan Regional Government (KRG) of Iraq, which confirmed the Consortium’s exclusive long-term rights to develop and produce gas and petroleum from both the Khor Mor and Chemchemal fields for the duration of the Contract, being not less than 25 years, as well as the KRG’s contractual obligation to pay the Consortium for the produced condensate and LPG at international prices, including the pricing methodology for each.
Further Details:
Production and Development
The Group share of production was 65,700 boepd, with the decline of 9% mainly due to a natural decline in production from fields in Egypt. However, the revenues related to the production decline in Egypt were offset by a 4% production increase in Kurdistan mainly due to an increase in LPG production, and the Egyptian production is projected to grow given the investments in the expansion programme.
Egypt
Dana Gas Egypt delivered total production of 35,010 boepd compared to 42,950 boepd in Q2 2014. The production decrease of 18% is in line with normal field decline trends for Nile Delta fields but was the result of delays in the planned drilling and tie-in schedules. The drilling of the Balsam-2 and Balsam-3 wells on the Balsam Development lease is expected to take up to four months to complete with results from both wells due in the last quarter of the year. The first exploration well on the El Matariya Onshore Concession (Block 3) operated by BP is scheduled to commence drilling in the first half 2016.
Kurdistan Region of Iraq
In the KRI, the Company’s quarterly share of production (40%) in the Khor Mor Field was 30,000 boepd, a slight increase over second quarter 2014 production of 28,800 boepd, predominantly as a result of increased LPG production.
Zora Gas Project
Dana Gas continues to make progress on its Zora Gas field project in the UAE’s Sharjah & Ajman Emirates, with first gas expected to come on-stream in the second half of 2015
Receivables
As at 30 June 2015, total receivables were US$1.05 billion. The Company received a total collection of US$49 million in Egypt, of which US$33 million was in cash and US$16 million was government offsets. Overall, trade receivables in Egypt are US$246 million. The Company continues to sell its liquid hydrocarbon products domestically on the local market in the KRI and collections from local sales during the period, after adjusting for cash deposit received in September 2014, amounted to US$17 million. The Company’s share of the trade receivables from the KRG stood at US$793 million by the end of the quarter..
Kurdistan Arbitration Update
On 5th July 2015, Dana Gas updated the market with regard to the case it has filed with the London Court of International Arbitration (LCIA) against KRG. On 30th June the LCIA Tribunal delivered a Partial Final Award confirming the Consortium’s contractual rights including a number of important issues addressed at the hearing in the week of 20 April 2015. The Tribunal’s Award confirms:
– The Consortium’s exclusive long-term rights to develop and produce gas and petroleum from both the Khor Mor and Chemchemal fields for the duration of the Contract, being not less than 25 years.
– The KRG’s contractual obligation to pay the Consortium for the produced condensate and LPG at international prices, including the pricing methodology for each.
– Dana Gas and Crescent Petroleum were entitled to farm out part of their own interests to MOL and OMV, and that the KRG was not entitled to a share of the farm-out proceeds.
The Arbitral Tribunal has also already fixed the date of 21st September 2015 to determine the Consortium’s monetary claim against the KRG for outstanding unpaid invoices for the produced condensate and LPG, now totaling US$1.96 billion as of end June 2015 as per the pricing methodology determined by the Award. The remaining claims in the arbitration will be heard during the next phase of the Arbitration, early in 2016.-ENDS-
About Dana Gas
Dana Gas is the Middle East’s first and largest regional private sector natural gas company established in December 2005 with a public listing on the Abu Dhabi Securities Exchange (ADX). It has exploration and production assets in Egypt, Kurdistan Region of Iraq (KRI) and UAE, with an average output of 68,900 boepd in 2014. With sizeable assets in Egypt, KRI and the UAE, and further plans for expansion, Dana Gas is aimed to play an important role in the rapidly growing natural gas sector of the Middle East, North Africa and South Asia (MENASA) region.
Dana Gas PJSC is required to keep the market updated with regard to the international arbitration case it filed in October 2013, along with Crescent Petroleum and Pearl Petroleum Company Limited (together the ‘Consortium’), before the London Court of International Arbitration (‘LCIA’). This case was filed in order to secure a mandatory arbitral declaration confirming the Consortium’s exclusive rights under its contract with the Kurdistan Regional Government of Iraq (‘KRG’), which was signed in April 2007 and is governed by English law (‘the Contract’):
On 2 July 2015, the LCIA Tribunal handed down its Partial Final Award ruling confirming beyond any doubt the Consortium’s contractual rights including a number of important issues addressed at the Arbitration Hearing which took place in London in the week of 20 April 2015.
The Tribunal’s Award confirms:
– the Consortium’s exclusive long-term rights to develop and produce gas and petroleum from both the Khor Mor and Chemchemal fields for the duration of the Contract, being not less than 25 years. (These rights had previously been disputed by the KRG since May 2009, preventing the proper and timely development of the fields);
– the KRG’s contractual obligation to pay the Consortium for the produced condensate and LPG at international prices, including the pricing methodology for each; and that
– Dana Gas and Crescent Petroleum were entitled to farm out part of their own interests to MOL and OMV, and that the KRG was not entitled to a share of the farm-out proceeds.
The Arbitral Tribunal has also already fixed the date of 21st September 2015 to determine the Consortium’s monetary claim against the KRG for outstanding unpaid invoices for the produced condensate and LPG, now totaling US$ 1.943 Billion as of end May 2015 as per the pricing methodology determined by the Award.
The remaining claims in the arbitration, including the Consortium’s claims for wrongfully delayed development of the fields, will be heard during the next phase of the Arbitration, currently scheduled for the first quarter of 2016.
Meanwhile, the KRG still remains in default of the Arbitral Tribunal’s Peremptory Order of October 2014 to pay the Consortium US$100 Million on an interim basis. Consequently and separately, the Consortium was compelled to seek English Court enforcement of this Order, and a hearing in this regard has been fixed for 28th and 29th October 2015 in the High Court of England.
Dana Gas and its Consortium partners reiterate their continued commitment to the Contract, the Kurdistan Region and all of Iraq, and sincerely hope that the KRG will henceforth respect its unambiguous contractual obligations which have now been confirmed by the LCIA Arbitral Tribunal. This will in turn enable the full and proper development of the Khor Mor and Chemchemal fields as envisaged by the Contract which could provide all of the fuel needs for power generation in the Kurdistan Region of Iraq as well as additional volumes of gas for export. This would result in billions of dollars annually of further cost savings for the KRG, as well as revenue generation for the benefit of the people of the Kurdistan Region and all of Iraq. In the meantime Dana Gas and its Consortium partners continue to produce an average of over 84,000 barrels of oil equivalent (boe) per day, including 335 million cubic feet per day of gas that enables affordable electrical power generation in the Kurdistan Region of Iraq.
Dana Gas and its Consortium partners are proud to be the largest oil and gas sector investors and cumulative producers in the Kurdistan Region of Iraq. To date, they have invested over US$ 1.2 billion in the Kurdistan Region and have already produced over 145 million boe of natural gas and petroleum liquids over almost seven years, thereby enabling affordable electricity provision and an economic and social transformation for the Kurdistan Region and its people.
Dana Gas, the Middle East’s leading regional private sector natural gas company, is pleased to confirm that it has commenced drilling the Balsam-2 development well in the Balsam Development lease onshore Nile delta. The Balsam-2 well is being drilled with the 2000 HP Egyptian Drilling Company’s Rig #48 and targets the Qawasim formation at a depth of 3200 m. A slanted and fully cored pilot hole will be drilled through the Qawasim reservoir and will be followed by the drilling of a 700 m horizontal section. 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 well is expected to take approximately 4 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 3 years and forms part of the Gas Production Enhancement Agreement (GPEA) work commitment. 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 over and above an agreed no further action decline production forecast. This mechanism is expected to effectively eliminate the receivables balance by end 2018, assuming that no further bullet payments are made to the petroleum sector by the Egyptian Government.
Dr Mark Fenton, GM Dana Gas Egypt, commented:
“We are very happy to be commencing our drilling operations as part of the GPEA. It represents the culmination of many months of preparation work and planning to assemble the portfolio of targets for drilling in conjunction with preparing our infrastructure to receive this additional gas and condensate. We are particularly proud to be extending our technical capabilities to include the drilling of horizontal wells. Balsam-2 is the company’s first horizontal well in Egypt and is a fitting well to kick off this drilling campaign which effectively targets to develop all the Company’s remaining conventional 2P gas reserves.”
Dana Gas is currently the 4th largest onshore gas producer in Egypt and is firmly committed to pursuing further opportunities in the region, in partnership with local and international energy companies.
Map of the Balsam-2 well location within the Balsam development lease, part of the original West El Manzala Exploration Concession.
—ENDS—
About Dana Gas
Dana Gas is the Middle East’s first and largest regional private sector natural gas company established in December 2005 with a public listing on the Abu Dhabi Securities Exchange (ADX). It has exploration and production assets in Egypt, Kurdistan Region of Iraq (KRI) and UAE, with an average output of 68,900 boepd in 2014. With sizeable assets in Egypt, KRI and the UAE, and further plans for expansion, Dana Gas is aimed to play an important role in the rapidly growing natural gas sector of the Middle East, North Africa and South Asia (MENASA) region.
– Dana Gas concludes agreement with BP for drilling an exploration well in El Matariya Onshore Concession (Block 3)
– Dana Gas to be carried for the exploration well costs
– The exploration well expected to spud 1H 2016
Under the terms of the agreement, BP as Operator will carry Dana Gas for its 50% share of the cost of the well, subject to an agreed cap of US$39 Million (Dana Gas share)..
In addition, BP has a further option, again subject to Government approval, to farm into other areas of Dana Gas’s WEM Concession and into the recently-awarded North El Salhiya Concession Area, for a 50% participating interest in each case, if it elects to drill a second exploration well and carry Dana Gas’s 50% share of the related well costs, again subject to a similar agreed cap. As with the first farm-in option, Operatorship and ownership of the existing and future shallow gas business of the farm-in areas will remain with Dana Gas.
The drilling of the first exploration well in the El Matariya Concession Area is expected to start in 1H 2016 and will take approximately 8 months to be completed. Options for evacuation of the gas through Dana Gas’ nearby infrastructure will be considered by the Joint Venture established for the El Matariya Concession Area.
Dr Patrick Allman-Ward, CEO Dana Gas, commented:
“We are very excited to be partnering with BP in drilling the Oligocene play onshore the Nile delta. This play has long been identified as having a significant potential in our concession area and, in particular, the Mocha prospect, which is the target of the exploration well to be drilled by BP in the El Matariya Concession Area with Dana Gas’ carried interest. A successful well result could lead to substantial growth for the Company in Egypt, open up the onshore Oligocene play in the Nile delta and could ultimately lead to a material increase in onshore gas production in Egypt. We are particularly pleased to have the well drilled by BP, which has extensive and successful experience in drilling deep, high pressure and temperature wells targeting the Oligocene in the offshore Nile delta area.”
Dana Gas is currently the 6th largest gas producer in Egypt and is firmly committed to pursuing further opportunities in the region, in partnership with local and international energy companies.
—ENDS—
About Dana Gas
Dana Gas is the Middle East’s first and largest regional private sector natural gas company established in December 2005 with a public listing on the Abu Dhabi Securities Exchange (ADX). It has exploration and production assets in Egypt, Kurdistan Region of Iraq (KRI) and UAE, with an average output of 68,900 boepd in 2014. With sizeable assets in Egypt, KRI and the UAE, and further plans for expansion, Dana Gas is aimed to play an important role in the rapidly growing natural gas sector of the Middle East, North Africa and South Asia (MENASA) region.
We are pleased to invite you to participate in a conference call that we are hosting on behalf of Dana Gas PJSC to present 1Q 2015 Results
Dr. Patrick Allman-Ward, CEO and the Senior Management Team of Dana Gas will be presenting on:
Date: Tuesday 5th May 2015 At: 5:00 PM (UAE time), 4:00pm (Saudi Time), 2:00pm (London), 9:00am (New York)
UK Dial in no: +44-20-7950-6551 Toll Free: 0800-279-3590
KSA Toll Free: 800-811-0076
US Dial in no: +1-210-795-1143 Toll Free: 866-297-1588 UAE Toll Free: 800-035-702-368
Participant Passcode: 3219232
7 day replay service:
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Passcode: 5326
Company: HSBC Chairperson: Sriharsha Pappu
For further details on the call, please contact Sriharsha Pappu: +971 4423 6924 or e-mail
Sean Evers:
I would like to begin by asking Rashid Al-Jarwan, Executive Director of Dana Gas, what your
outlook will be vis-à-vis new partnerships, what they make look like. Do you expect to be
drilling oil in Abu Dhabi within five years?
Rashid Al-Jarwan:
Dana Gas, which was only formed in 2005, now produces about 70,000 barrel oil per day
equivalent through our operations in Egypt and the Kurdistan Region of Iraq. This positions us
as among the leading producers in these fast developing markets.
05 February 2015
Sharjah, UAE
Dana Gas PJSC, the Middle East’s largest regional private sector natural gas company, today announced its preliminary un-audited results for the year ended 31 December 2014.
Dana Gas saw full year gross revenue reach US$ 683 million (AED 2.50 bn), a 5% annual increase despite a sharp fall in oil prices during the second half of 2014. This revenue increase was predominantly due to higher production from Egypt and the Kurdistan Region of Iraq (KRI). Production in Egypt rose 9% to 14.6 million barrels of oil equivalent (boe) and KRI production increased 3% to 10.4 million boe, boosting overall Group production by 6% to 25.1 million boe in 2014.
Operating profits were US$ 10 million (AED 37 million) higher in 2014 as compared to 2013. Despite improved production performance and a more stringent approach to costs, the Company posted a lower net profit of US$ 125 million (AED 457 million). This was mainly due to falling oil prices in the 3rd and 4th quarters of the year. In 2013, the Company posted a net profit of US$ 156 million (AED 571 million), enhanced by a one-off gain of US$ 39 million (AED 143 million) from the sale of MOL shares. On a quarterly basis, Q4 2014 revenue was US$ 142 million (AED 521 million) with net loss US$ 4 million (AED 15 million) as compared to US$ 186 million (AED 682 million) and net profit of US$ 35 million (AED 128 million), respectively in Q4 2013. The net loss during the quarter was primarily due to lower realized hydrocarbon prices and recognition of an impairment charge.
As of 31 December 2014, Dana Gas had collected cash of US$ 163 million (AED 597 million) from Egypt, excluding $ 47 million of offsets against Block 6 signature bonus and accounts payable. Some of the monies were reinvested into existing projects and production facilities in Egypt throughout the year and the balance will be ring-fenced to pay for commitments made under the Gas Production Enhancement Agreement. The Company was also able to commence direct, local sale of condensate and LPG in the KRI, resulting in US$ 34 million (AED 125 million) of collections. Cash balance at year end stood at US$ 184 million (AED 674 million).
Patrick Allman-Ward, CEO of Dana Gas, said: “Despite the fall in oil prices Dana Gas’ strong financial performance in 2014 was driven by a rise in annual production. Our current short-term focus is on increasing our production further, driven by our Gas Production Enhancement Agreement in Egypt and the Zora Gas Project in UAE which will add 10% to our current group production of 68,900 boepd. Our long-term focus is on our three new onshore and offshore blocks in Egypt and developing our Khor Mor and Chemchemal gas fields in the Kurdistan Region of Iraq. Our prudent and focussed approach to cost controls has made us one of the lowest cost operators in the region and we are now in a stronger position to deliver the long-term value our shareholders deserve.”
Group Overview
Egypt
In September 2014, Dana Gas Egypt concluded a Gas Production Enhancement Agreement (GPEA) with the Egyptian Government that will deliver incremental production in the region of 270 billion cubic feet of natural gas, 9 million barrels of condensate and 450,000 tons of LPG. The revenues generated from the incremental sales will be used to pay-down the outstanding receivables held by the Egyptian Government to nominal levels by 2018. The Company has been awarded three new blocks onshore and offshore Nile Delta. Block 1 and Block 6 are 100% owned and operated by Dana Gas and Block 3 is 50% owned by Dana Gas and BP.
Kurdistan Region of Iraq
In July 2014, Dana Gas along with Crescent Petroleum and Pearl Petroleum Ltd (Consortium) disclosed it had been successful in its application for interim relief in the international arbitration case it filed with the London Court of Arbitration in October 2013 against the Kurdistan Regional Government (KRG). The interim relief award recognized the lack of payments due by the KRG and the resulting cessation of cash flow was depriving the Consortium members of their ability to pay debts as they fall due. The Tribunal had ordered the KRG to pay the Consortium, with effect from 21 March 2014, 70% of the international FOB Med prices of liquid petroleum products lifted by the KRG or for its account.
In November, the Tribunal had ordered the KRG to pay the Consortium US$ 100 million within a timeframe of 30 days by way of a second interim order. In default of its legal obligations, the KRG failed to make payment by the stipulated deadline of 17th November 2014 and as a consequence, the Tribunal’s order became peremptory in nature, enabling its enforcement by the English Court. With the Tribunal’s permission, on 12th December 2014, an application to the English Court was made for the enforcement of the order, with the prospect of sanctions being imposed on the KRG for non-compliance. In addition to these interim measures ordered by the Tribunal, Dana Gas and its Consortium partners continue to pursue multi-billion dollar claims in the arbitration against the KRG for breach of contractual commitments, which will be determined in a hearing that has been ordered by the Tribunal to take place in the week of
20th April 2015.
UAE
Dana Gas secured a US$ 100 million Term Facility for the Zora Field Development Project in September 2014. The facility is being used to contribute to the debt component of the financing needed to complete the project. In November 2014, Dana Gas announced it had completed 75% of the offshore jacket which was completed and loaded onto a barge in January 2015 for installation in the gas field. Production is expected by H1 2015.
Production and Development
Overall group net production in 2014 increased by 5% to 68,900 boepd as compared to 2013’s average production of 64,700 boepd.
Dana Gas Egypt’s gas, LPG, condensate and crude oil full year output averaged 39,900 boepd, 9% higher as compared to 36,700 boepd in 2013. In the first quarter of 2014, the Company successfully completed a scheduled upgrade and maintenance work on the El Wastani gas plant that boosted output capacity by 25% to 200 mmscfd [6,650 boepd]. Q4 2014 output averaged 37,300 (Q4 2013: 39,800 boepd).
In the KRI, the Company saw its full year share of production in the Khor Mor field increase slightly by 3% to 28,500 boepd as compared to 27,600 boepd in 2013. Q4 2014 output averaged 28,400 (Q4 2013: 28,500 boepd).
Collections and Trade Receivables
Dana Gas Egypt collected US$ 210 million (AED 769 million) in 2014 as compared to US$ 134 million (AED 481 million) in 2013, an improvement of US$ 76 million (AED 288 million) as the Egyptian authorities implemented their long-standing agreement to pay down receivables owed to oil and gas producers. This included EGAS/EGPC offset of Block-6 signature bonus of US$ 20 million (AED 73 million) and US$ 27 million (AED 99 million) payable to government owned contractors against the amount due to the Company. All of the money received in Egypt will be ring-fenced for committed current and future investments. As of 31 December 2014, trade receivables in Egypt stood at US$ 233 million (AED 854 million) compared to US$ 274 million (AED 1 billion) in 2013.
Dana Gas’ KRI operations, of which it has a 40% share, collected US$ 34 million (AED 125 million) in 2014, down significantly from US$ 69 million (AED 253 million) in 2013. Included in the collection was US$ 18 million (AED 66 million) received as a guarantee against future lifting of product. As of 31 December 2014, the trade receivable balance stood at US$ 746 million (AED 2.73 billion) compared to US$ 515 million (AED 1.88 billion).
Dana Gas Sukuk
In 2014, Dana Gas received voluntary early conversion notices for the convertible Sukuk amounting to US$ 72.9 million (AED 267.2 million). Accordingly 357,094,708 ordinary shares calculated at a conversion price of AED 0.75 (nominal value of AED 1.0) were issued to satisfy the notice. These conversion will result in Sukuk profit saving of approximately US$ 5 million in 2015.
About Dana Gas
Dana Gas is the Middle East’s first and largest regional private sector natural gas company established in December 2005, with a public listing on the Abu Dhabi Securities Exchange (ADX). It has exploration and production assets in Egypt, Kurdistan Region of Iraq (KRI) and UAE, with an average output of 68,900 boepd in 2014. With sizeable assets in Egypt, KRI and the UAE, and further plans for expansion, Dana Gas is aimed to play an important role in the rapidly growing natural gas sector of the Middle East, North Africa and South Asia (MENASA) region.
Recent payment of $60 million (AED 220 million) from the Egyptian Government
01 February 2015
Sharjah
Dana Gas, the Middle East’s leading regional private sector natural gas Company, is pleased to announce a number of major milestones in the successful fulfillment of its growth strategy in Egypt.
Most recently, the signing of Blocks 1 and 3 Concession Agreements in the Nile Delta provides Dana Gas with additional highly material growth opportunities in the country. This supplements a number of positive developments including the recent signing of the landmark Gas Production Enhancement Agreement (GPEA) and the large payment made by the Egyptian government in December towards outstanding receivables. Together, these milestones place the Company on a much stronger footing in Egypt from which it can benefit for its next phase of growth.
The GPEA allows the Company to significantly enhance production and to start gradually recovering its outstanding receivables in a phased manner over the next few years. This is in addition to the payments made to the industry by the Egyptian authorities from time to time.
Following the signing of this GPEA agreement, a US$ 60 million (AED 220 million) payment was made to Dana Gas by the Egyptian Government in December 2014 as part of its payments to the industry. This payment accounts for 28% of the total overdue receivables of US$ 212 million (AED 778 million), and will be used to fund future investment requirements and address operational expenses in Egypt.
The newly awarded Block 1 (DG 100% and Operator) is expected to extend the Company’s highly successful shallow gas production business onshore the Nile Delta. In Block 3, the Company will participate on a 50% basis with BP as partner and Operator. This exploration venture is targeting the deep Oligocene potential of the area, which, in case of success, would result in material production growth for Egypt and be transformational for the Company.
Patrick Allman-Ward, Chief Executive Officer of Dana Gas, said: “ I am pleased to announce that Dana Gas Egypt has delivered a number of important achievements in recent months which are potentially game-changing for our business. We are poised to deliver strong growth in Egypt in the short term as a result of the signing of the Gas Production Enhancement Agreement duly supported by the payment made by the Egyptian government last month. We have also secured medium- term growth potential through our successful bids for these two new exploration blocks in the Nile Delta. We see this positive momentum continuing and are excited about our exploration and development plans in Egypt.”
Dana Gas is currently the 6th largest oil and gas operator in Egypt. In 2014, the Company was able to increase average production of gas, LPG, condensate and crude oil to around 40,000 barrels of oil equivalent per day, which was an 8% increase over 2013 average production. It has surpassed the milestone of producing over 100 million barrels of oil equivalent accumulatively since commencing its operations in Egypt in 2007.
About Dana Gas
Dana Gas is the Middle East’s first and largest regional private sector natural gas company established in December 2005, with a public listing on the Abu Dhabi Securities Exchange (ADX). It has exploration and production assets in Egypt, Kurdistan Region of Iraq (KRI) and UAE, with an average output of over 70,000 boepd in 2014. With sizeable assets in Egypt, Iraq and the UAE, and further plans for expansion, Dana Gas is aimed to play an important role in the rapidly growing natural gas sector of the Middle East, North Africa and South Asia (MENASA) region.
Dana Gas Egypt is currently the sixth largest gas producer in Egypt and has around 1000 Egyptian staff. The Company owns a 100% interest in thirteen Development Leases onshore the Nile Delta which it operates through the El Wastani Petroleum Company (Wasco), Dana Gas’ joint-venture company with EGAS and EGPC. Over the last seven years, the Company has invested around $2 billion in exploration, development and production in Egypt. To date, Dana Gas Egypt has made 25 discoveries, and has produced over 100 million BOE accumulatively.
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Dana Gas 4Q 2014 Financial Results Conference Call Analyst and Investor Invitation
DANA GAS is pleased to invite you to participate in the Q4 2014 Financial Results Conference Call on Thursday 5th February 2015
16:00 UAE // 15:00 KSA // 12:00 London // 07:00 New York
The call will start at 16:00 UAE local time and will be hosted by: Dr. Patrick Allman-Ward – CEO and the management team
Dial in details:
UAE: 8000 3570 2593
UK: +44 20 3427 0503
USA: +1646 254 3365
Passcode: 8207660
Live web meeting:
To be entered directly into your Live Meeting Event click on the Direct Access Link:
http://www.livemeeting.com/cc/premconfeurope/join?id=8207660&role=attend&pw=pw8004
Alternatively enter the Live Meeting site and log into your meeting using the Meeting ID and Password:
Live Meeting: https://www.livemeeting.com/cc/premconfeurope/
Your Name: (Enter your name)
Meeting ID: 8207660
Meeting Password: pw8004
The presentation and the call script will also be available on Dana Gas website: www.danagas.com
Replay will be available from Thursday, 5 February 2015 at 15:00 PM BST and will be available for 7 days
Direct dial-in number UK: +44 20 3427 0598 Direct dial-in number USA: +1 347 366 9565
Passcode: 8207660
Please e-mail: investor.relations@danagas.com with any questions
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Payment as part of industry payout made to the petroleum sector
04 January 2015
Sharjah
Dana Gas, the Middle East’s leading regional private sector natural gas Company, announced today that it has received from the Egyptian Government a payment of US$ 60 million (AED 220 million). This represents 28% of the total overdue receivables of US$ 212 million (AED 778 million). This payment has been received in the form of US$ 10 million and the balance in equivalent Egyptian pounds. All of this money will be used to pay for the Company’s overdue industry receivables, fund future investment requirements and address operational expenses in Egypt.
Earlier in 2014, Dana Gas and the Egyptian Government signed the landmark Gas Production Enhancement Agreement (GPEA) which allows the Company to significantly enhance production and gradually recover its outstanding receivables in a phased manner over a 3-year period going forward. The GPEA agreement allows investments to be made in an important development program to eventually increase production from current levels of around 40,000 BOEPD from the Company’s Development Leases in the Nile Delta. Under the GPEA, Dana Gas will undertake a long term staged work program over a seven year period with project work expected to start in the next few months. The first export sales of incremental volumes of condensate will follow thereafter. Estimated incremental production during the period will be approximately 270 Billion cubic feet of natural gas, 8 to 9 million barrels of condensate and around 450,000 tons of LPG. Peak production is expected to occur in 2017 with incremental daily production of approximately 160 MMscf gas and 5,600 barrels of condensate.
During the discussions that Dana Gas has continued to have with the Egyptian authorities to resolve the issue of its outstanding payments, it has already been able to increase production for the benefit of the Egyptian economy and its people. Dana Gas Egypt’s gas, LPG, condensate and crude oil production averaged 40,000 barrels of oil equivalent per day in 2014, which is an 8% increase over 2013 average production.
Patrick Allman-Ward, Chief Executive Officer of Dana Gas, said: “We would like to thank the Egyptian Government for making this payment. We are also delighted to have concluded the Gas Production Enhancement Agreement and are working closely with the authorities to accelerate the implementation of the GPEA in order to fast-track enhanced production and the payment of the remaining outstanding receivables as quickly as possible going forward. Dana Gas is now preparing for the startup of the project and is in the process of securing materials and drilling rigs”.
Dana Gas is among the most active oil and gas companies and is the 6th largest gas producer in Egypt. The Company has invested around US$ 2 billion in Egypt to date, making it the GCC’s largest investor in the oil & gas sector in the country.
Dana Gas was also recently awarded the North El Salhiya (Block 1) and El Matariya (Block 3) onshore Concessions in the Nile Delta as part of the 2014 EGAS bidding round held recently in Egypt. The Company will operate the Block 1 Concession Area on a 100% basis. It is expected that exploration success and future production from conventional gas reservoirs in the Block, utilizing Dana Gas’s existing infrastructure, has the potential to extend the Company’s highly successful gas production business onshore the Nile Delta.
Dana Gas Egypt will participate in the Block 3 Concession Area on a 50% basis with BP as partner and operator.
In addition, Dana Gas has 100% working interest in the North El Arish (Block 6) Concession Area, offshore the eastern Nile Delta. Multiple play types have been identified within the acreage and plans for the first exploration phase includes seismic acquisition and the drilling of one exploration well.
About Dana Gas, Egypt
Dana Gas Egypt is currently the sixth largest gas producer in Egypt and has around 1000 Egyptian staff. The Company owns a 100% interest in thirteen Development Leases onshore the Nile Delta which it operates through the El Wastani Petroleum Company (Wasco), Dana Gas’ joint-venture company with EGAS and EGPC. Over the last seven years, the Company has invested around $2 billion in exploration, development and production in Egypt. To date, Dana Gas Egypt has made 25 discoveries, and has produced over 100 million BOE accumulatively.
12 November 2014
Sharjah
Dana Gas, the Middle East’s leading regional private sector natural gas company is pleased to announce its consolidated financial results for the nine months and third quarter period ended 30 September 2014.
In the nine month period ended 30 September 2014, Dana Gas reported a 16% increase in revenue to $541 million as compared to $466 million the previous year. Net profit in the nine month period of 2014 was also high at $129 million as compared to $121 million for 9M 2013. Profit from operations was higher by 57% to $129 million as compared to $ 82 million that was achieved in 9M 2013, if a one-off gain of $39 million following the partial sale of MOL shares in 1H 2013 is excluded. Production was up 11% at 70,500 barrels of oil equivalent per day (boepd) as compared to the average daily production of 63,400 boepd achieved in 9M 2013.
The Company posted robust third quarter revenue of $174 million (3Q 2013 $170 million) and gross profits of $79 million (Q3 2013: $71 million). Net profits were up 36% to $38 million (3Q 2013: $28 million) underpinned by an increase in production and a strong focus on cost discipline. Production during the third quarter increased by 3% to reach 68,700 boepd compared to 66,850 boepd in Q3 2013.
Operationally, the third quarter saw the Company sign two major agreements in Egypt and took a significant step forward in restarting income generation in the Kurdistan of Iraq (KRI) through local sales of liquid products.
The Gas Production Enhancement Agreement was signed in September 2014 with the Egyptian Government. This agreement commits Dana Gas Egypt to a seven year work programme whereby the Company keeps the proceeds from incremental liquid sales which will be used to pay down receivables. Also in Egypt, two new blocks – Block 1 and 3 onshore Nile Delta – were awarded as part of an EGAS bid round conducted earlier in the year.
Cash from operations and cash collections improved during 3Q 2014, as the Company received a total of $71 million during the quarter. The Company’s cash collection in Egypt was $53 million, out of which $36 million was in local Egyptian Pounds earmarked to settle overdue payables to service providers to its Egypt operations and $11 million is ring-fenced towards funding for the previously announced GPEA in Egypt, wherein it was agreed that the money received would be reinvested into this project in Egypt going forward.
In relation to its Kurdistan operations, the Company received a cash advance amounting to $18 million as part of its 40% share in PPCL in the Kurdistan Region of Iraq.
Dr Patrick Allman-Ward, CEO of Dana Gas, commented: “Our continuous focus on operational excellence and cost discipline is paying off resulting in significantly improved net profits for the quarter and year to date. We have made good progress in restarting cash flow in KRI through the initiation of local sales of liquid products. Our operations have continued uninterrupted despite the ongoing security situation in Iraq. We remain fully committed to Egypt and are very pleased to have found a win-win solution for all parties through the Gas Production Enhancement Agreement which commits the Company to making significant new investments which will result in higher production for the country and allows Dana Gas to recover outstanding receivables within a defined period of time.”
EGYPT
Operations
Dana Gas signed the Gas Production Enhancement Agreement (GPEA) on 30 September 2014 with the Egyptian government, ensuring the Company long-term production growth and a significant reduction in receivables. The GPE has committed Dana Gas to a staged work programme over a seven year period with drilling expected to start in the first quarter of 2015. This will result in increased liquid volumes which will be monetised in accordance with the GPE agreement. As part of the work programme commitment, Dana Gas will drill over 20 new development wells and conduct a similar number of work-overs of existing wells. The estimated incremental production during the period will be approximately 270 billion cubic feet of natural gas, 8 to 9 million barrels of condensate and around 450,000 tons of LPG. Peak production is expected in 2017 with incremental daily production of approximately 160 mmscfd gas and 5,600 barrels of condensate. In return for the Company’s work programme commitment, financial proceeds from the direct sale of all of the incremental condensate in international markets at international prices will be retained by Dana Gas and will be used to reduce its outstanding receivables balance. Under the agreement it is envisaged that outstanding receivables from the government, will reduce to nominal levels by 2018. In addition, Dana Gas expects that it will receive payments from the Government as part of its ongoing strategy of paying down overdue receivables due to the oil and gas industry in the country.
In late September, Dana Gas reinforced its presence in the Nile Delta by successfully bidding for onshore Blocks 1 and 3 as part of the 2014 EGAS bid round. Under the terms of the agreement, Dana Gas holds 100% of Block 1 and 50% working interest alongside BP in Block 3. The joint-venture partnership with BP on Block 3 affords Dana Gas a partner with a strong track record of exploration and production in Egypt. An additional positive commercial consideration is that the two blocks are located adjacent to Dana Gas’s existing development leases thus allowing for potential leveraging of the existing infrastructure in case of potential discoveries.
Production
In the third quarter, the Company produced an average 40,500 boepd, marginally higher than 39,350 boepd in 3Q 2013. Production is expected to stabilise over the remainder of the year. The GPEA work programme is expected to commence in early 2015, allowing the Company to resume its production growth up to 2017.
KURDISTAN REGION OF IRAQ
Operations
Pearl Petroleum Company Limited (PPCL), the consortium company of which Dana Gas has a 40% share, commenced direct, local sale of condensate and LPG in September 2014. The Company received its share in the form of $18 million cash advance against future product deliveries. This represents a step forward in restoring income generation in KRI.
Production
Dana Gas’s share of gross production in the KRI for the third quarter was 27,700 boepd as compared to 27,100 boepd in Q3 2013.
UAE
Operations
The Company recently announced that it has secured $100 million Term Facility for the Zora Field Development Project. The facility will contribute the debt component of the financing needed to complete the project and bring the Zora gas field on-stream in 1H 2015. The field is expected to provide a production of 40 mmscfd (6,650 barrels of oil equivalent per day). The gas will be transported via a subsea pipeline to an onshore gas processing facility located in Hamriyah Freezone in Sharjah.
LIQUIDITY AND FINANCIAL RESOURCES
On a year to date basis, the Company has collected a total of $ 99million in cash. The Company’s receivables, however, were positively impacted by $46 million which was set off against the North Al Arish Offshore Block 6 signature bonus and liabilities due to other Government owned contractors in Egypt.
As part of its liquidity management, Dana Gas also completed a sale of 350,000 shares i.e. around 25% of sell-down of its equity holding in MOL and realised gross proceeds of $18 million in October 2014.
The Company’s outstanding receivables, as of 30 September 2014, are $276 million in Egypt and $712 million in the KRI.
During the period from 1 January 2014 to 30 September 2014, the Company received voluntary early conversion notices for the convertible sukuk amounting to USD 72,926,080. These conversions will result in sukuk profit saving of approximately $ 3 million in 2014