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Dana Gas Signs Participation Agreement with BP

Source: www.gulfoilandgas.com 6/2/2015, Location: Africa

Dana Gas, the Middle Eastís leading regional private sector natural gas company, is pleased to confirm that it has completed an agreement with BP, whereby BP will carry Dana Gas for the drilling of a first exploration well in the El Matariya onshore Concession Area, Nile Delta in Egypt, which was awarded to BP and Dana in the EGAS 2014 International Bid Round.

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 US$39 Million (Dana Gas share).

In consideration for the carry, BP has the option, subject to Government approval, to farm into parts of Dana Gasís West El Manzala (WEM) Concession Area while retaining WEM Operatorship and ownership of the existing and future shallow gas business with Dana Gas.

In addition, BP has a further option, again subject to Government approval, to farm into other areas of Dana Gasís WEM Concession and into the recently-awarded North El Salhiya Concession Area, for a 50% participating interest in each case, if it elects to drill a second exploration well and carry Dana Gasís 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 El Matariya Onshore Concession Area is located onshore Nile Delta and covers an area of 960km2. It is located adjacent to Dana Gasís existing West El Manzala and West El Qantara Development Leases and the recently acquired North El Salhiya (Block 1) Concession Area.

The drilling of the first exploration well in the El Matariya Concession Area is expected to start in 1H 2016 and will take approximately 8 months to be completed. Options for evacuation of the gas through Dana Gasí nearby infrastructure will be considered by the Joint Venture established for the El Matariya Concession Area.

Dr Patrick Allman-Ward, CEO Dana Gas, commented:
We are very excited to be partnering with BP in drilling the Oligocene play onshore the Nile delta. This play has long been identified as having a significant potential in our concession area and, in particular, the Mocha prospect, which is the target of the exploration well to be drilled by BP in the El Matariya Concession Area with Dana Gasí carried interest. A successful well result could lead to substantial growth for the Company in Egypt, open up the onshore Oligocene play in the Nile delta and could ultimately lead to a material increase in onshore gas production in Egypt. We are particularly pleased to have the well drilled by BP, which has extensive and successful experience in drilling deep, high pressure and temperature wells targeting the Oligocene in the offshore Nile delta area.

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