Islamic Finance

Texan Company and Dana Gas cancel $236 million Egyptian deal

Published 25 Apr,2021 via Bloomberg Markets - Dana Gas PJSC’s $236 million deal to sell oil and gas blocks in Egypt to Texan company IPR Energy Group has fallen through.

The agreement between the two firms, announced in October, was terminated after they failed to finalize terms, Dana Gas said in a statement on Sunday to the Abu Dhabi stock exchange.

Dana Gas said it will now keep the assets, which accounted for output equivalent to 31,000 barrels a day of oil in 2019. The company, one of the Middle East’s biggest private-sector gas producers, will also drill an exploration well in the offshore Block 6 in the first quarter of 2023.

The Sharjah, United Arab Emirates-based firm was set to receive $153 million in cash and as much as $83 million in contingent payments. While Dana Gas is still assessing the financial implications of the cancellation, it believes the Egyptian assets will improve its balance sheet and profitability “in the coming years,” it said.

Dana Gas said last year the sale would help it pay back a $309 million sukuk. While the Islamic bond was redeemed at the end of November, the firm took on a $90 million bridge loan from Dubai’s Mashreq Bank. Dana Gas did not say in Sunday’s statement how it would repay the loan.

The company had intended to focus on expanding output in the Kurdish region of northern Iraq after after the sale. Dana Gas said on Tuesday that the Kurdistan Regional Government -- which has been late paying invoices for production in the past -- was settling its bills “in a timely manner”.

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