ERBIL (Kurdistan 24) – Dana Gas has hired an investment bank to counsel the company on shifting its investment focus from Egypt to the autonomous Kurdistan Region, sources told Reuters on Sunday.
The gas firm hired Tudor, Pickering, Holt & Co. to advise in that regard and help to sell its assets in Egypt, worth over $500 million, sources familiar with the topic said.
Dana Gas, headquartered in Abu Dhabi, has its main assets in Egypt and the Kurdistan Region. According to one of the anonymous sources cited in the report, the company feels that focusing on a single geographical territory would attract more investors to the company in the future.
So far, the Dana has made no public comments that confirm or deny the move.
It, however, began to market its Egyptian assets over the past few weeks, but buyers have yet to start buying them, a source added, stating that the assets are worth “well over $500 million.”
The source also mentioned that the Kurdistan Region, though boasting a great deal of potential growth, has substantial capital expenditure requirements, so the company’s attempt to sell its Egyptian assets is “strategic”.
Dana announced on Sunday a new oil discovery in its Kurdistan Region fields, thought to potentially have the largest gas reserves in the country.
Pearl Petroleum, a consortium majority-owned by Dana Gas and its affiliate Crescent Petroleum, earlier this year signed a 20-year gas sale agreement with the Kurdistan Regional Government (KRG) that will facilitate the production and sale of an additional 250 MMscf/d of gas.
“Pearl Petroleum's expansion plan will see output increase to 650 MMscf/day in 2022, and then to 900 MMscf/day by 2023 from the current 400 MMscf/day,” the company said in a statement.
“With the price of oil ranging between $60 to $70 per barrel, each of these two new gas production trains will generate between $175 to $200 million to the Company's share of revenue and project's cash flows per annum.”
Dana Gas’ Chief Executive Patrick Allman-Ward earlier in May stated that Pearl Petroleum would increase funding for Kurdistan Region investments using alternative sources of financing.
He also mentioned that Dana’s capital expenditure for the Kurdistan Region was estimated to be around $70 million - $90 million in 2019 while Egypt, it would have been nearly $90 million.
Allman-Ward on Sunday stated that the Gaffney Cline report has independently confirmed Dana Gas' 2P reserves in their Kurdistan Region assets at over one billion barrels of oil equivalent.
“Our belief that the Khor Mor and Chemchemal Fields will most likely be the biggest gas fields, not just in the Kurdistan Region Iraq, but the whole of Iraq, making them world-class assets,” the company’s executive chief said.
He noted that it is also satisfying to see that their auditors have formally booked oil reserves for the first time in Khor Mor.
“We believe that this is just the tip of the iceberg confirming our estimate of oil resource potential of over 7 billion barrels. 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,” Allman-Ward underlined.
Editing by John J. Catherine