Dana Gas' share of reserves in Kurdistan project up 10% following new audit

The company’s share in Khor Mor and Chemchemal reserves rises to 1 billion barrels of oil equivalent after latest certification

Dana Gas said on Sunday its share of hydrocarbon reserves in Kurdistan project went up following new oil discovery. Courtesy of Dana Gas

Dana Gas' share of hydrocarbon reserves at Pearl Petroleum’s Khor Mor and Chemchemal fields in the Kurdistan Region of Iraq (KRI) increased by 10 per cent following a new re-certification of reserves, Dana Gas said on Sunday.

The independently audited report, prepared by by Gaffney Cline Associates (GCA) on behalf of Pearl Petroleum, showed that the total share for Dana Gas - a 35 per cent shareholder in Pearl Petroleum - is now equivalent to 1 billion barrels of oil equivalent, up from 990 million barrels of oil equivalent when GCA first certified the fields in April 2016. The measure is based on proved plus probable (2P) hydrocarbons.

“The Gaffney Cline report has independently confirmed Dana Gas’ 2P reserves in our KRI assets at over 1 billion barrels of oil equivalent and our belief that the Khor Mor and Chemchemal fields will most likely be the biggest gasfields, not just in the Kurdistan Region Iraq, but the whole of Iraq, making them world-class assets,” said Patrick Allman-Ward, chief executive of Sharjah's Dana Gas.

Dana Gas’ share of the Khor Mor and Chemchemal 2P reserves was 4.4 trillion cubic feet gas, 136 million barrels of condensate, 13.3 million tonnes of LPG and 18 million barrels of oil, the equivalent of 1 billion barrels of oil equivalent, as compared to 990 million barrels of oil equivalent in April 2016, the company said.

“These additional resource declarations will underpin our future development plans which will provide a reliable source of energy to meet the needs of electricity generation as well as industrial development in the region.”

Dana Gas and Crescent Petroleum, its Sharjah-based partner in the Pearl Consortium, operate the Khor Mor and Chemchemal fields. Earlier this year, the partners said they would invest $700 million (Dh2.5 billion) as part of a sales agreement with the KRG and expansion plan for the gas assets.

As part of the 20-year gas sales agreement with the KRG, the two parties will boost gas production by 63 per cent, or 250 million standard cubic feet per day (scf/d), to 650 million scf/d by 2021, and to 900 million scf/d by 2022. Production of condensate from the assets is expected to reach 35,000 bpd by 2022.

Separately, Dana Gas said it is abandoning drilling operations at its deep water Merak 1 well in Block 6 in Egypt as it did not discover commercially viable hydrocarbon reserves at the site. The company’s other operations in Egypt continue to operate normally, the company said in a statement onthe Abu Dhabi bourse, where its shares are traded.

Earlier this year, the firm reported a 150 per cent increase in net profit in the first quarter of 2019 to $35m due to an increase in production in the KRI and on lower financing costs.

Dana Gas is also considering selling its assets worth over $500m in Egypt to focus on Kurdistan projects, Reuters reported on Sunday quoting sources. The company has hired investment bank Tudor, Pickering, Holt & Co to advise on the transaction, according to the report.

Its exploration and production assets in Egypt are onshore the Nile Delta except for Block 6 in the Eastern Mediterranean Sea.