Ageing assets blamed for drop
- Dana Gas CEO says outlook is positive
- Progress is being made in ramping up production at firms offshore Nile Delta concession
- Dana Gas was owed $243m by Egyptian government at end of first quarter
Between the first quarter of 2014 and the same period in 2015, the UAE-based Dana Gas oil production in Egypt declined by the equivalent of 1,400 barrels of oil a day (b/d) to about 37,700 b/d.
The company revealed the new production figures for Egypt as part of its first-quarter earnings report.
Natural field depletion has been blamed for the drop in production.
Despite the decline, Patrick Allman-Ward, Dana Gas CEO, says the outlook is positive as the company continues to make progress on plans to ramp up production in the Nile Delta area after striking a deal with the Egyptian government in September last year.
Dana Gas has struggled to gain receivables from Cairo and was owed a total of $243m at the end of the first quarter, up from $233m at the end of last year.
Under the terms of the September deal agreed with the Egyptian government, the firm will be able to export any extra condensate it produces as a result of ramping up hydrocarbons production in the country.
The profits from the condensate sales will be deducted from the total sum owed to Dana Gas by the Egyptian government.
As part of the deal, the company is also committed to a seven-year staged, $350m work programme with 20 new development wells and 17 work-overs of existing wells.
Current plans will see 10 wells drilled and about 10 work-overs carried out in 2015.
There is also an extensive pipeline infrastructure upgrade under way to support the drilling programme.
Dana Gass offshore concession in the Nile Delta area is known as North el-Arish.
The company also owns a 100 per cent interest in three onshore concessions in the Nile Delta area, known as El-Manzala, West el-Manzala and West el-Qantara.
The concessions now consist of 14 development leases with gas and condensate production from 12 fields, and with a further two fields in development.
Dana Gas is currently benefiting from cheaper costs related to the drop in oil prices, according to Allman-Ward, who says the cost of rigs in Egypt has fallen by more than 10 per cent.
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