Dana Gas terminates sale of Egyptian assets

Company is assessing the effect the cancellation will have on its finances

A Dana Gas refinery in the Kurdistan Region of Iraq. Dana Gas is seeking a $250 million loan to expand output in the region​​​​​​ WAM

Sharjah-based Dana Gas terminated a $236 million deal reached last October to sell its Egyptian assets to exploration and production company IPR Wastani Petroleum.

"A number of conditions precedent to the transaction could not be completed to the satisfaction of both parties prior to the long stop date of the Sale and Purchase Agreement, which was Wednesday April 14, 2021," the company said in a statement to the Abu Dhabi Securities Exchange, where its shares are traded, on Sunday.

The Dana Gas board has decided to retain and operate assets in Egypt alongside the offshore Block 6.

The "binding agreement" with IPR Wastani Petroleum, a part of IPR Energy Group, also included contingent payments, Dana Gas said in a statement to the ADX at the time.

Dana Gas expected the transaction, which was subject to the approval of the Egyptian Ministry of Petroleum and Mineral Resources, to be completed early this year, it said in October.

The effect of the cancellation of the sale on Dana Gas's finances is still being assessed.

However, the company said there could be “positive consequences” on its profitability and balance sheet, as well as an improvement in cash flow over the coming years.

“We look forward to maximising the value of both our onshore producing assets and focusing our attention on testing the enormous potential of our offshore Block 6 Concession Area, where we are planning to drill an exploration well in the first quarter of 2023,” said Dana Gas chief executive Patrick Allman-Ward.

In February, Mr Allman-Ward said Dana Gas was in discussions to secure a $250m loan from the Development Finance Corporation to expand gas production in the Kurdistan Region of Iraq.

The company reported a net loss of $376m last year, compared with a net profit of $157m in 2019, because of lower oil prices and the economic blow of Covid-19.

Revenue fell by 24 per cent to $349m last year, compared with 2019, due to lower realised prices and lower production in Egypt.