Dana Gas and British Petroleum (BP) signed a participation agreement, where BP will conduct the drilling of a first exploration well in the El-Matariya onshore Concession Area, located in the Nile Delta.
The drilling is expected to start in the first half of 2016.
“Under the terms of the agreement, BP as operator will carry Dana Gas for its 50% share of the cost of the well, subject to an agreed cap of $39m (Dana Gas share),” Dana Gas said in an official statement.
In its statement, Dana Gas highlighted that if the Egyptian government approves, BP has the option to farm into other areas of Dana Gas’s WEM Concession and North El-Salhiya Concession Area. This will occurr for a 50% participating interest in each case.
This will be applicable if BP approves to “drill a second exploration well and carry Dana Gas’s 50% share of the related well costs, again subject to a similar agreed cap”.
“As with the first farm-in option, operatorship and ownership of the existing and future shallow gas business of the farm-in areas will remain with Dana Gas,” the company added.
In September 2014, Dana Gas signed a gas production enhancement agreement (GPEA) with the Egyptian Natural Gas Holding Company (EGAS) and the Egyptian General Petroleum Company (EGPC). According to the agreement, the company will work on drilling 37 new wells and carrying out maintenance of existing wells.
Around 270bn cubic feet of natural gas, 8m to 9m barrels of condensate, and around 450,000 tonnes of liquefied petroleum gas (LPG) are expected to be produced during a seven-year period.
In March 2015, the company announced that it will invest $350m in Egypt over the next 2.5 years, on top of its normal operating costs.
“This is just the capital investment, and of course we have ongoing operating costs, and general overhead costs. So, the total commitment is significantly higher than $350m,” CEO Patrick Allman-Ward told Daily News Egypt.
During the first quarter of 2015, the company’s total production was around 37,700 barrels of oil equivalent per day (boepd), compared to 39,100 boepd in 2014. The company attributed the lower production to the “natural decline in gas wells”.