The London Court of International Arbitration has ruled on July 19 in favour of United Arab Emirates energy firm Dana Gas, validating the termination of a deal to sell its onshore oil and gas assets in Egypt.
Earlier in April, the arbitration was initiated by IPR Wastani Petroleum, a member of the IPR Energy Group which had agreed to buy the assets from Dana Gas in October.
However, Dana Gas cancelled the $236 million deal on April 22 as it said the buyer had failed to meet certain conditions.
A claim brought by IPR Wastani was rejected “in its entirety”, Dana Gas added in a filling to the Abu Dhabi Securities Exchange, where its shares are traded.
The ruling was in favour of Dana Gas on “all key points, concluding that Dana Gas’ termination of the SPA was valid”, the statement read. Therefore, the ruling in its favour means that Dana Gas will continue to operate its Egyptian assets.
Patrick Allman-Ward, chief executive of Dana Gas
“The award confirms that Dana Gas was correct and within its contractual rights to terminate the sale’s process,” Patrick Allman-Ward, chief executive of Dana Gas, said in the statement.
“The board has made a decision to continue to hold and operate the assets in the best interests of the company and its shareholders as well as for our broader stakeholders.” Allman-Ward added.
Dana Gas is “pleased with the outcome of this arbitration and with the speed with which this final decision was made”,
The company remains committed to operating the Egyptian assets to the “highest operational and safety standards”.
The terminated sale deal would have seen Dana Gas spinning off its 100 percent working interests in the El Manzala, West El Manzala, West El Qantara, and North El Salhiya onshore concessions and associated development leases.
It also comprised a base cash consideration of $153 million, including the net working capital associated with the assets and contingent payments of almost $83 million.
Back in April, Allman-Ward said the effect of the cancellation of the sale on Dana Gas’s finances is still being assessed but can only be “positive” in terms of cash flows.
Dana Gas has been operating in Egypt for the past 14 years and is the fifth-largest gas producer in the country. The company currently produces about 30,000 barrels of oil a day from 14 development leases.
“We are also excited about the potential of our offshore Block 6 concession area and we are working hard to be able to drill an exploration well in the block as soon as practicably possible.” Allman-Ward added.
