UAE's Dana Gas gets timely release of $20m from Egypt government
Incoming funds represent part of deal UAE company struck with Egypt's government
Dubai: The UAE energy company Dana Gas has received a timely end of year boost - a $20 million payment from the Egypt government. This takes the total funds received from Egypt in Q4-2024 to $24.5 million. Dana Gas operates a plant in the North African country and has been awaiting the release of the funds.
These will be reinvested in the company’s Egypt operations, which will allow Dana Gas to 'proceed with its planned investment program'. As such, the release of funds represents a 'major milestone' for the company’s operations in Egypt.
Sustainable dividends
Dana Gas also said the resumption of payments in Egypt will help the company ensure sustainable dividend payments to shareholders.
The outcome is part of the 'consolidation agreement' negotiated with the Egyptian Government and is expected to be formally signed shortly. It was ratified by the Egyptian Parliament in early June, and is part of the government’s strategic initiative to support Egypt’s energy sector and increase domestic gas production.
While the $20 million intake is timely, Dana Gas will 'require future regular monthly payments from the Egyptian Government to ensure all phases of the program will be completed'.
"We are encouraged by the recent commitment from the (Egyptian) Ministry of Petroleum and Mineral Resources to provide regular monthly payments, along with progress towards resolving our overdue receivables," said Richard Hall, CEO of Dana Gas. "Future payments will be key to enabling the successful execution of the next phases of the consolidation program."
Dana Gas operates two major production facilities, in Egypt and the Kurdistan Region of Iraq. In the latter, there had been issues with multiple mortar attacks, but which did not lead to any extended shutdown of operations. (On ADX, the Dana Gas stock closed at 0.72 on Wednesday (December 11).)
The company consolidated its existing producing concessions in Egypt into a single concession with improved terms, which will 'enhance the economics of any future exploration and development activities'. The work program - which includes six exploration and five development wells - is expected to increase ultimate gas recovery by 80 billion cubic feet.
Savings of $1b for Egypt
This initiative will extend the life of Dana Gas’s assets in the country, and yield cost savings of over $1 billion for Egypt’s economy by reducing reliance on imported LNG and mazut for power generation.
"The latest payment from the Egyptian Government further reduces the company’s receivables and enhances its liquidity position," said Hall. "The improved liquidity will allow the company to consider the resumption of sustainable dividend payments to our shareholders."