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Kurdish reserves boost Dana Gas as it seeks buyer for Egypt assets
Kurdistan
UAE-BASED Dana Gas this week announced that its share of proven plus probable (2P) reserves in the Kurdistan Region of northern Iraq had increased following an audit by Ga ney Cline Associates (GCA).
the audit was commissioned by the Pearl Petroleum consortium, in which Dana holds a 35% stake, and focused on Pearl’s Khor Mor and Chemchemal elds. e GCA report showed that Dana’s stake in Pearl was equivalent to 1.087bn barrels of oil equivalent (boe), a rise of nearly 10% on the 990mn boe certi ed by GCA’s April 2016 audit.
e boost came on the back of Dana having booked more than 50mn barrels of oil (gross) from Khor Mor.
In a statement, Dana said that its Khor Mor and Chemchemal reserves were made up of 4.4tn cubic feet (125bn cubic metres) of gas, 136mn barrels of condensate, 13.3mn tonnes of LPG and 18mn barrels of oil.
Dana CEO Patrick Allman-Ward said that the audit had con rmed his rm’s “belief that the Khor Mor and Chemchemal Fields will most likely be the biggest gas elds, not just in the Kurdistan Region, but the whole of Iraq, making them world-class assets”.
He added that Dana saw this as “just the tip of the iceberg”, noting the company’s estimate that Khor Mor has an oil resource of 7bn barrels.
On March 6, Dana Gas announced that Pearl had signed a new 20-year gas sales agreement with the KRG.
e details were not disclosed beyond that the deal would “enable the production and sales of an additional [2.6 bcm per year] that the consortium aims to produce by 2021 ... to boost much-needed local domestic electricity generation”.
Gas from the eld is piped to power plants in Bazian, Chemchemal and Erbil.
Pearl had reached critical nancial and con- tractual settlements with the KRG in the second half of 2017, paving the way for further develop- ment of their respective assets. is came a er eight years of acrimonious international legal dispute over the terms governing licences for the Khor Mor and Chemchemal gas elds.
Under the deal reached with Pearl, the con- sortium committed to invest $400mn of the agreed $1bn payment from the authorities in expansion at the larger Khor Mor eld to raise production to 6.7 bcm per year by 2021.
Dana Gas is partnered in Pearl by a liate Crescent Petroleum, Austria’s OMV, Germany’s RWE and Hungary’s MOL.
An interim target of 4.1 bcm per year was
achieved in November through debottlenecking. An estimated $700mn project is now ongoing to reach the 2021 goal and hit 9.3 bcm per year the following year, entailing the installation of two new production trains and the drilling of mul- tiple new wells.
Financial trouble
Releasing 2018 results in February, Dana recorded a net loss of $186mn on the back of impairments totalling $250mn. $187mn of this arose from the decision to write o the o shore Zora field on the Sharjah-Ajman maritime border.
the field came on stream in 2016 after delays, with target production of 0.41 bcm per year. However, actual output reached barely half that level at its peak, and by the end of 2018 had slumped to only 0.06 bcm per year and is expected to cease this year.
Of more concern for investors was the con- tinued fall in Egyptian output on the back of nat- ural well maturation and a period of minimal investment.
Output from the North African country slipped from 39,500 boepd in 2017 to 34,500 boepd last year and assets there were impaired by $59mn. Outstanding arrears owed by Cairo were reduced by 39% to end 2018 at a still-he y $140mn, despite promises from the government to clear the debt by the end of the period.
Despite having reprised the optimism expressed in recent months over o shore Block 6 North El-Arish, where a high-impact well said to be targeting reserves of 113-170 bcm is due to be spudded in the second quarter, Reuters reported on July 29 that Dana had decided to nd a buyer for its Egyptian assets.
e report said that Dana had hired tudor, Pickering, Holt & Co. (tPH) to advise on the sale of the assets, which it said were valued at more than $500mn.
Reuters quoted a source close to proceedings as saying that focusing on a single geographical area could appeal to prospective investors.
Other than Block 6, all of Dana’s Egyptian assets are located in the onshore Nile Delta.™
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